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NEW DELHI: Mining magnate Anil Agarwal’s Vedanta has won an arbitration against a demand for a higher payout from its Rajasthan oil and gas fields after disallowance of Rs 9,545 crore (about $1.2 billion) in certain costs incurred, the company said.
According to a contract, companies are allowed to recover all costs incurred before splitting profit in a predetermined ratio with the government. If a certain portion of cost is disallowed, it would result in higher profits and a resultant higher share to the government. Vedanta had challenged such a demand before an arbitration tribunal.
The government has sought additional profit petroleum (or its share from the oil and gas fields) after it reallocated certain costs between the fields in the block and disallowed a portion of the cost incurred on laying a pipeline to transport oil produced from the Rajasthan block.
It, however, did not give details of the arbitration award. “The company is in the process of reviewing the award in detail and evaluating its financial impact,” it said.
It is not known if the government will abide by the arbitration award. It has previously challenged all arbitration awards it has lost.
According to a contract, companies are allowed to recover all costs incurred before splitting profit in a predetermined ratio with the government. If a certain portion of cost is disallowed, it would result in higher profits and a resultant higher share to the government. Vedanta had challenged such a demand before an arbitration tribunal.
The government has sought additional profit petroleum (or its share from the oil and gas fields) after it reallocated certain costs between the fields in the block and disallowed a portion of the cost incurred on laying a pipeline to transport oil produced from the Rajasthan block.
It, however, did not give details of the arbitration award. “The company is in the process of reviewing the award in detail and evaluating its financial impact,” it said.
It is not known if the government will abide by the arbitration award. It has previously challenged all arbitration awards it has lost.
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