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• Rebutting the claims by Reliance Industries Limited (RIL) and British Gas (BG) regarding Panna-Mukta and Tapti oil fields, the Petroleum Ministry has filed a counter claim charging the duo with accounting discrepancies, cost recovery limit (CRL) 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 as per the new revised plan of development (NRPOD) 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 $5.71 per mmbtu 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 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.
• Further more, the note by the DGH states that the claimant (RIL and BG) has considered inflated sales for notional tax calculation at $310,359,270 which should have been $214,146,669. Similarly, the contractor 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 $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 have been reduced drastically. This had an adverse impact on IM and the consequent share of government in petroleum profit.
• About the Panna-Mukta PSC, the note states the contractor has not considered the 10 per cent amount withheld by GAIL, on the directions of the government, till the issue of delivery point in the case of Panna gas is resolved including the transportation tariff between ONGC as transporter and the joint venture for usage of pipeline from offshore to Haizra. Short-accounting on account of not considering the marketing margin received at $0.12 per mBtu from buyers of gas — $5,826,668 and $7,050,164 for 2005-06 and 2006-07, respectively. It states the commingled gas at Hazira was not properly accounted between the two PSCs which led to short accounting of sales by $23,919,282 in Panna-Mukta PSC.
• Similarly, the note charges the contractor with excess cost recovery of $62.5 million for various activities during 2002-03 beyond the cap of corresponding activities included in the development cost of $577.5 million reflected in Article 13 of PSC.

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