Reliance Industries Ltd. (RIL) investors saw more than ₹10,000 crore in market value wiped out on Tuesday as the stock slumped 2% on reports the Centre had slapped a demand notice for about $3 billion on the company and its partners operating the Panna Mukti and Tapti oil and gas fields.
“RIL as part of the contractor for Panna Mukta and Tapti production sharing contracts, has been notified by Government of its computation of the purported share of GOI’s profit petroleum and royalty alleged to be payable by the contractor pursuant to the GOI’s interpretation of arbitration tribunal’s final partial award” of October 12, 2016, an RIL spokesperson said in a statement. The demand notice was “premature” and RIL had already responded appropriately to the notice, the statement added.
RIL and Royal Dutch Shell each hold 30% stake in the fields while Oil and Natural Gas Corp. (ONGC) holds the remaining 40% stake.
The Centre had demanded that the operators pay about $3 billion after an international tribunal upheld the government’s view that profit from the fields be taxed at the current rate of 33% and not the earlier 50%, a source at one of the consortium partners said on condition of anonymity.
“The quantification of liabilities (if any) of the parties arising out of the partial award have to be determined by the arbitration tribunal after the parties have made their respective submissions on quantification. The arbitration tribunal is yet to schedule the timeline for the quantification phase,” the RIL spokesperson said.
‘Sub judice’
“...before the process of quantification can commence certain outstanding issues will have to be resolved,” the spokesperson said in the statement, adding that RIL had already challenged the partial award in U.K. courts and that the matter was “sub judice”.
RIL shares declined 2.03% to close at ₹1,519.90 on the BSE, as the company’s market value slid back below ₹5 lakh crore, a mark it had surpassed only on Monday.