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More levy on RIL

In deep waterS

New Delhi, July 14: Petroleum minister Dharmendra Pradhan today told Parliament that the government had slapped an additional penalty of $579 million on Reliance Industries Ltd for producing less-than-the-targeted natural gas from its KG-D6 block.

This, along with the previous penalties for missing targets in four fiscals beginning April 1, 2010, amount to a penalty of $2.376 billion, Pradhan informed the Lok Sabha today.

The penalty is in the form of disallowing costs incurred and is not paid in cash. The production-sharing contract (PSC) allows RIL and its partners BP and Niko Resources to deduct all capital and operating expenses from the sale of gas before sharing profit with the government.

Disallowing costs will result in the government’s profit share rising $195 million from 2010-11 to 2013-14, he said.

In a written reply to a question, Pradhan said output from the Dhirubhai-1 and 3 gasfields in the eastern offshore KG-D6 block was supposed to be 80 million metric standard cubic meters per day (mmscmd). However, actual production was only 35.33 mmscmd in 2011-12, 20.88 mmscmd in 2012-13 and 9.77 mmscmd in 2013-14.

This year the output has been only 8.05 mmscmd.

The oil ministry had on July 10 issued a notice disallowing $579 million in cost for output lagging targets in 2013-14.

 
 
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