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January 22, 2015: The government has hardened its position in a $1 billion dispute over the Panna Mukta and Tapti oil and gas fields, alleging the contractors (Reliance Industries and BG) presented arbitrators with financial statements different from audited accounts, and indulged in heavy exaggeration of tax payments which reduces the state's share of profit. It has also questioned the neutrality of arbitrators in the dispute between the oil ministry and Reliance Industries and BG (British Gas), official and industry sources said. The fields were discovered by ONGC but in the 1990s it was given to consortium of Enron Corp (which sold its stake to BG later), Reliance Industries with 30% interest each, and ONGC with 40%. The disputes are over taxes and royalties and the computation of state's share of profit. 

"The total amount involved in the disputes is at least $1 billion. It is very odd that the accounts presented to the arbitrators are different from the audited accounts. We are taking legal ad vice on this very serious matter," a source familiar with the case told ET. Reliance Industries did not respond to emailed queries at the time of going to press. Petroleum Minister Dharmendra Pradhan has held discussions on legal implications of the alleged excessive tax deduction and the submission of accounts to the arbitrators, which were different from the audited accounts and has asked appropriate agencies and legal advisors for opinion if these amounted to "fraud", sources said. 

The government has also questioned appointment of arbitrators. Sources said that the legal advisors suspect that the chief arbitrator, Christopher Lau, had some connections with Allen & Overy which represented Reliance and BG in the arbitration. Lau had himself made a declaration in the beginning of the arbitration process that his daughter had worked for Allen & Overy. The government had earlier challenged the appointment of arbitrators in another dispute also. It had also argued against the appointment of a foreigner as the presiding arbitrator. The legal deliberations within the government on the Mukta -Panna arbitration was reported by the Indian Express in its edition dated 21 January 2015. 

(Source: Economic Times)