VISAKHAPATNAM: The Union government will constitute an Inter-Ministerial Group to respond to the arbitration notice served by the Ras-Al-Khaimah Investment Authority (RAKIA) for payment of compensation on total investment of US$44.71 million being made by it or ensure immediate supply of bauxite ore to the alumina refinery set up in Andhra Pradesh.
The Ministry of External Affairs vide letter No AC/202/459/2016 dated December 30, 2016, has entrusted the Ministry of Mines to be the nodal ministry for contesting the notice of arbitration. The IMG will be headed by the Secretary of the administrative ministry concerned, sources said.
RAKIA and the Penna Group jointly made investment on the refinery near Makavarapalem, 100 km from here, based on the MoU signed with the AP Mineral Development Corporation and clearances given by the Ministry of Mines, Government of India, for supply of bauxite ore from the Agency areas.
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The problem arose following the decision of the AP Cabinet last year to scrap the MoU with Anrak Aluminium Limited (AAL), a joint venture formed by RAKIA and its Indian partner Penna Group to execute the project. The MoU signed by the Y.S. Rajasekhara Reddy Government in February, 2007, had envisaged mining of 224 million tonnes in Jerrela block. Objections by anti-mining groups, tribal people and Opposition parties led to the cancellation of the MoU.
When contacted, a senior official of Anrak told The Hindu on condition of anonymity that they had already taken a bank loan of nearly Rs.4,500 crore on which they were incurring an annual interest liability of Rs. 500 crore to Rs. 600 crore .
The Ministry of Mines, in the office memorandum dated January 5, stated they had received the arbitration notice under the India-UAE Bilateral Investment Promotion and Protection Agreements (BIPA) dated December 8, 2016.
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RAKIA had served the notice to the Prime Minister of India, several ministries, including Mines, External Affairs, Environment, Forests & Climate Change and the AP government, invoking Article 10(5)(b) of India-UAE BIPA and Article 3 of United Nations Commission on International Trade of Law (UNCTRAL) Rules.
According to the office memorandum, citing that the dispute has arisen primarily in regard to the bauxite supply by APMDC to Anrak, RAKIA has served an international arbitration notice seeking mainly to fulfil the commitment to supply bauxite to Anrak or pay RAKIA the compensatory damages on total investment of US$44.71 million made by RAKIA in Anrak.