The Directorate of Petroleum, Rajasthan Government has served a notice on Mukesh Ambani owned Reliance Industries Limited (RIL) warning it of penal action for its failure to deposit the differential Petroleum Exploration License (PEL) fee for two coal bed methane (CBM) blocks in the State.

In a letter to Jayant Parimal, RIL president (CBM), the Rajasthan Director Petroleum, A.K. Kakroo has advised the company that the differential PEL fee for the 5th and 6th years for both the blocks may immediately be deposited to the Directorate of Petroleum failing which penal action shall be initiated as per rules.

The letter states that a licensee/operator is liable to comply with provisions of P&NG Rules, 1959 including that of the Petroleum Ministry notifications, issued from time to time. It was in line with these rules that the demand for differential PLE fee has been raised. The State Government had initially issued the PEl for six years in accordance with the approval of Petroleum Ministry of October 4, 2004, hence initial validity of four years or its renewal does not arise. The issue relates to PEL blocks BS (1) CMB-2003/II and BS (2) CMB-2003/II.

The Government has pointed out that acceptance of relinquishment is yet to be considered by the license granting authority, in this case State Government, as per rules. Information for relinquishment has been conveyed to the State government through RIL letter dated march 24, 2010. As per rules, two months notice period is required for acceptance of relinquishment of the blocks from March 26, 2010 onwards. Moreover, the relinquishment is still due in want of approval from the Directorate General of Hydrocarbons. Hence, question of the adjustment of 6th year PEL fee against differential PEL fee demand raised due to enhancement of rates does not arise. It is therefore, advised the differential fee be paid failing which the company will face penal action.