GAIL appoints arbitrator in PMT dispute

Vol 10, PW 20 (08 Feb 07) News in Brief

GAIL has appointed its own arbitrator in its continuing dispute with the Panna, Mukta and Tapti consortium over outstanding payments for the sale of gas.

An industry source tells this report that the GAIL arbitrator is former chief justice of India Ramesh Chandra Lahoti. GAIL’s action is in response to a move by consortium partners British Gas and Reliance who appointed former chief justice of India SP Bharucha as their common arbitrator.

Lahoti and Bharucha will meet to choose a third, independent arbitrator at which point proceedings will begin. BG (30%), Reliance (30%) and ONGC (40%) claim GAIL owes them $140m as the difference in the gas price for 10 months to 1st April 2005.

Out of this amount, around $40m is due to the government. As a state-owned company ONGC is barred from launching legal proceedings against fellow state company GAIL.

If the arbitrators rule against GAIL, ONGC will receive 40% of the money that is due to the consortium.