BG and Reliance surprise at GAIL plea for PMT help

Vol 10, PW 25 (19 Apr 07) People & Policy

British Gas and Reliance express surprise at GAIL’s plea for oil ministry help to resolve the row over unpaid gas bills from the Panna, Mukta and Tapti fields.

“If GAIL was so keen to avoid litigation it should have responded to the several attempts we made to resolve the matter,â€‌ says a consortium source. Instead, we are told, “GAIL just kept quiet, pretending that nothing was wrong and we were left with no choice but to appoint our arbitrator.

â€‌ Adds our source: “GAIL did not take seriously even the legal notice we sent it informing them of our intention to go for arbitration.â€‌ Now that the arbitration process has begun, “GAIL should place its point of view before the arbitrators and we will reply to it.

â€‌ Arbitrators and former chief justices of India RC Lahoti, SP Bharucha and AM Ahmadi held their first meeting in the last week of March. A second meeting is scheduled sometime in May.

At issue is the difference in the gas price and other outstanding payments for 10 months to 31st March 2005. BG and Reliance insist GAIL owes the consortium this difference of $140m.

GAIL disputes this claim and says it owes nothing. Taking refuge behind the oil ministry, PETROWATCH learns that GAIL executive director J.

Wason wrote to oil ministry joint secretary gas DN Narasimha Raju on 21st March seeking, “intervention to convene an immediate meeting of all concerned to resolve the issue amicably to avoid litigation.â€‌ Adds the letter: “GAIL refutes the PMT JV claims stating that the supply of gas at $3.86 per mmbtu was decided in a meeting at the Ministry of Petroleum and Natural Gas, prospectively from 1st April 2005, and as such no gas price differential amount, interest and sales tax is payable to the PMT JV.

â€‌ Sadly for GAIL the ministry appears to have decided to let the arbitration process run its course. Adds a consortium source: “We’ve not received any communication from the ministry on this.


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