Dharmendra Pradhan asks DGH to quantity compensation RIL has to pay

By: |
New Delhi | Published: September 30, 2016 7:55:48 PM

Buying more time, the Oil Ministry has asked its technical arm DGH to quantify the compensation Reliance Industries has to pay for drawing out natural gas belonging of state-owned ONGC.

Oil Minister Dharmendra Pradhan. (Source: PTI). (PTI)Oil Minister Dharmendra Pradhan. (Source: PTI). (PTI)

Buying more time, the Oil Ministry has asked its technical arm DGH to quantify the compensation Reliance Industries has to pay for drawing out natural gas belonging of state-owned ONGC.

Oil Minister Dharmendra Pradhan, who had previously stated that his ministry would decide on the issue by September-end, today said the Directorate General of Hydrocarbons (DGH) will calculate the compensation within one month.

The Justice A P Shah Committee had in a report presented to Pradhan on August 31 opined that RIL should pay the government for the natural gas it has drawn from an adjacent block of ONGC in the KG basin of the Bay of Bengal in the past seven years.

“We have accepted Shah Commission’s recommendations entirely. Compensation has to be calculated. Whatever Mr Shah has recommended, government has accepted that,” Pradhan told reporters here.

Pradhan on August 31 said that the ministry, as per an order of the Delhi High Court which ONGC had approached to seek compensation for its gas, has one month to decide on the issue from the date of presentation of the report.

“Yes, we will seek compensation. That needs to be quantified. Fact of the matter has been established. There has been migration. There are some protocol how to look into the issue. DGH will be asked to calculate the amount. They will calculate the amount within one month,” he said today.

Once DGH calculates the amount, notices will be served, he said.

In its report, the one-man Shah panel said the Mukesh Ambani-run firm should pay for the gas that had migrated or seeped from ONGC blocks into its gas fields.

“RIL’s action of producing and selling gas migrated from ONGC block is unjust enrichment,” the report said, adding that over 11 billion cubic metres of gas had flowed from the ONGC block to RIL’s fields between April 1, 2009 and March 31, 2015. Of this, RIL has already produced about 9 bcm.

The panel however said the compensation should go to government and not ONGC.

The committee said: “The Government of India, and not ONGC, is entitled to claim restitution from RIL for the unjust benefit it received and unfairly retained. ONGC has no locus standi to bring a tortuous claim against RIL for trespass/conversion since it does not have any ownership rights or possessory interest in the natural gas.”

As much as 11.122 billion cubic metres of ONGC gas had migrated from its Godavari-PML and KG-DWN-98/2 blocks to adjoining KG-D6 of RIL between April 1, 2009 and March 31, 2015. At prevailing prices, the gas was worth Rs 11,000 crore.

While ONGC’s reservoirs have almost emptied, RIL continues to produce gas from D1&D3 fields in KG-D6 block, some of it belonging to ONGC.

Shah committee had relied on report of independent consultant D&M to make its case.

D&M had in its November 2015 report indicated that as on March 31, 2015, 44.32 per cent of the gas initially in place in Godavari PML and 34.71 per cent in KG-DWN-98/2 (both of ONGC) had migrated to KG-D6 of RIL. The report projected a higher proportion of gas migration and its production through RIL operated KG-DWN-98/3 (KG-D6) block by the end of 2019.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Euro hits two-month low vs Swiss franc on Deutsche Bank jitters
2Reserve Bank of India says monetary policy committee to meet on October 3-4
3Gurgaon’s potential as realty investment rises; Southern Peripheral Road could attract buyers