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An amicable solution between Reliance Industries Ltd and the Petroleum Ministry on the dispute regarding cost recovery from the D6 block is unlikely.
A senior Petroleum Ministry official said that the notice served to RIL on Wednesday disallowing about $1 billion as cost recoveries for 2010-11 and 2011-12 in the East Coast gas fields is based on recommendations made by the highest legal authorities.
RIL has been held responsible for violation of its committed work programme under the production sharing contract.
When the output from the producing gas fields started seeing a steep decline, the Ministry asked the Solicitor-General and others what should be done, the official said.
The Solicitor-General advised that the least which the Ministry could do was to serve a notice disallowing cost recovery for the period.
On whether this was in response to the arbitration notice served by RIL, the official said, last November the notice sent by Reliance was pre-mature and based on media reports.
In fact, this notice by the Government should have been sent earlier, but it has been done only after doing due diligence.
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