Rebutting the claims by Reliance Industries Limited (RIL) and British Gas (BG) on Panna-Mukta and Tapti oil fields, the Petroleum Ministry has filed a counter claim charging the duo with accounting discrepancies, cost recovery limit enhancement and non-completion of committed work programme, causing a loss of $1.93 billion to the public exchequer in the case of Tapti fields and $3.77 billion in the case of Panna-Mukta fields.
In its reply to the claims filed by RIL and BG before the Arbitral Tribunal in respect of mid-South Tapti PSC, the Petroleum Ministry, through the Directorate-General of Hydrocarbons (DGH), has stated that the new revised plan of development approved by the managing committee with capex of $518.73 million, envisaged daily production of 12 million scmd over a plateau period of six years due to additional compression. However, the production could not be achieved as scheduled and the value of loss in monetary terms at $5.71 per mBtu (million British thermal unit) is calculated at $1.93 billion.
In the case of Panna-Mukta fields, the reply states that as per committed times agreed by the contractors, claimants should have completed the Mukta field work development by 1996. However, no significant work programme had been done, which has resulted in loss of production from Mukta field estimated at 37.7 million barrels amounting to $3.77 billion. The DGH has stated that the contractor inflated the notional income tax calculation by booking $96,321,459 during 2006-07 as against $3,398,084, which impacted the investment multiple (IM) calculated at 1.24 as against correct IM of 1.46. This impacted the Government's share of petroleum profit in the subsequent years in 2011-12 where the share should have been at 40 per cent instead of 20 per cent given by the contractor during the first quarter.
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Furthermore, the note by the DGH states that the claimant (RIL and BG) has considered inflated sales for notional tax calculation and has taken excess cost petroleum of $415 million (as on March 31, 2011) as against the production sharing contract (PSC) cap of $545 million. The note goes on to state that sales have been short-accounted for not considering the marketing margin as part of sales by $1,237,395 for 2005-06 and by $1,683,874 during 2006-07. The income-tax rate, considered for purposes of notional tax calculation, is 50 per cent throughout since inception of PSC in 1994, whereas the actual rate of tax for the companies has been reduced drastically.