Modi government is all set to slap a penalty on reliance Industries for producing less than targetted natural gas from KG-D6 block.
When Arvind Kejriwal-led 49 day government had crumbled to find a way towards the Lok Sabha elections, their incompetence had started coming to the fore. The Aam Aadmi Party, which related every scam in the country to Ambani and dubbed every critic of it as ‘Ambani-Adani agent’, had based its entire election campaign against the then BJP candidate and now Prime Minister of the country Narendra Modi.
But the same ‘Ambani-agent’ Modi and his government has done what Aam Aadmi Party would never have dreamt of. The government is likely to impose an additional penalty of USD 578 million on Reliance Industries for producing less-than-targeted natural gas from its eastern offshore KG-D6 block.
Production from the main gas fields in the KG-D6 block has dropped to about a 10th of the planned 80 million standard cubic meters per day. The fall in output meant that facilities created at huge investment went unutilised.
The production sharing contract allows RIL and its partners BP Plc and Niko Resources to deduct all capital and operating expenses from the sale of gas before sharing profit with the government. The creation of excess or unutilised infrastructure impacts the government’s profit share and this is sought to be corrected by disallowing part of the expenses incurred.
Agencies reported that the penalty in the form of disallowing costs incurred on the field will be for missing the target in 2013-14. With this, the total costs disallowed will increase to USD 2.375 billion.
The government had previously issued a notice to RIL disallowing a total of USD 1.797 billion in costs for falling short of production during 2010-11 (USD 457 million), 2011-12 (USD 548 million) and 2012-13 (USD 792 million).
According to the reports, RIL, which disputed the levy and initiated arbitration against the government, did not respond to an e-mail seeking comment. A note is being put to Oil Minister Dharmendra Pradhan for disallowing cost recovery of USD 578 million in 2013-14. A notice will be sent to RIL once he approves it.
The ministry apparently believes that USD 115 million in additional profit share would have accrued to the government from disallowing the cost in 2013-14. To recover this additional profit share, it has proposed that state-run companies deduct USD 115 million from payments due to RIL for crude oil and gas bought from KG-D6 block.
Once Pradhan approves, the ministry will instruct Chennai Petroleum and Hindustan Petroleum, which buy crude oil from the KG-D6 block, and GAIL India, which purchases KG-D6 gas, to remit USD 115 million deducted from payments to RIL and deposit the amount in a government account.
The government’s profit share would rise by USD 195 million if all of the USD 2.375 billion of disallowed costs is deducted from expenses incurred.
On the other hand, Kejriwal’s AAP government had doled out Rs 323 crore to Reliance from funds meant for the three municipal corporations in February this year – when it was in power in the national capital.
The money, which was meant to be spent by municipal corporations on the welfare of people, was given to Reliance at a time when Kejriwal and his government was accusing private discoms in public of overcharging.
With this, the ‘holier than thou’ approach of the Kejriwal government was exposed, yet it chose to remain silent and is still onto misleading people over its work during the 49 days in the capital.
Will Mr Kejriwal tell who is the ‘Ambani-agent’ now?