Reliance Industry fined additional Rs 2500 Crore by Modi Govt
It seems that even the mega-corporations like Reliance can’t escape penalties for economic offences, despite what detractors like Arvind Kejriwal say about Ambani’s undue influence on the NDA government.
According to reports, the Centre has slapped an additional penalty of around Rs 2,500 crore on Reliance Industries and its partners in order to neutralize the the government’s loss of “profit petroleum” for producing less than targeted natural gas from eastern offshore Krishna Godavari-D6 fields.
According to a senior official, “In a communication sent on June 3 to RIL by the government, the penalty has revised from $195 million as on March 31, 2014, to $246.9 million till March 31, 2015.”With this, the total penalty, which is in form of disallowing recovery of cost incurred, for missing the target in five fiscal years beginning April 1, 2010, now stands at a cumulative $2.76 billion.
The Production Sharing Contract (PSC) allows RIL and its partners BP Plc of the UK and Canada’s Niko Resources to deduct all capital and operating expenses from the sale of gas before sharing profit with the government.
Gas output from Dhirubhai-1 and 3 gas field in the eastern offshore KG-D6 block was supposed to be 80 million standard cubic meters per day but actual production was only 35.33 mmscmd in 2011-12, 20.88 mmscmd in 2012-13 and 9.77 mmscmd in 2013-14. The output has been around 8 mmscmd in subsequent years.
The government had for 2010-11 disallowed $457 million of cost, $548 million for 2011-12, $792 million for 2012-13 and $579 million for 2013-14. Now, another $380 million cost has been disallowed for output lagging behind target in 2014-15. The output was behind target in 2015-16 as well and the government is yet to issue a cost disallowance notice for that.
RIL said disallowance of cost is currently under arbitration.The Mukesh Ambani firm had initiated arbitration in November 2011 in anticipation that the government would impose a penalty on the explorer for not meeting output targets. The Centre has disallowed costs to the tune of $2.756 billion till March 2015 for expenses incurred in KG-D6.
RIL said of the additional profit petroleum claimed, the government has already collected gross $81.7 million in the gas pool account.