oppn parties RIL Stake Sale To Aramco In Trouble As The Government Seeks Security For PMT Arbitration Award

News Snippets

  • T20 WC: USA enter Super Eights as their last match against Ireland gets washed out. They were ahead of Pakistan in the points tally. Pakistan were eliminated
  • T20 WC: USA enter Super Eights as their last match against Ireland gets washed out. They were ahead of Pakistan in the points tally. Pakistan were eliminated
  • BJD leader and former Odisha CM Naveen Patnaik said that the criticism of his aide V K Pandian is "regrettable"
  • As more than 20 BJP ministers lost in the recent elections, the new Union cabinet will have many new faces from the party
  • Congress Working committee asks Rahul Gandhi to take up the position of Leader of Opposition in Lok Sabha. Gandhi says he will consider the request
  • RBI governor Shaktikanta Das said that gold was shifted to India as the quantum of RBI gold abroad had increased due to recent purchases
  • Delhi HC rules that submitting photographic evidence of adultery will not be enough, they will have to be proved as authentic in the age of deepfakes
  • A four-member panel will review NEET-UG results of 1563 candidates to check if they were given extra marks for exam time loss
  • Mamata Banerjee says her party will not join Modi's oath-taking ceremony. Also says INDIA bloc might stake claim to form government later
  • K C Tyagi of the JD(U) dropped a bombshell when he said that Nitish Kumar was offered the post of prime minister for switching sides. Opposition leaders rubbished the claim
  • This May was India's hottest month in 36 years says IMD
  • T20 WC: India take on Pakistan today. Telecast to begin at 8pm IST
  • T20 WC: Afghanistan stun New Zealand and Bangladesh win against Sri Lanka
  • T20 World Cup: Australia beat England by 36 runs. This spoils England's chances of making the playoffs as they have lost both their matches till now
  • Heat wave continues in the country as monsoon moves slow
G7 commits to promote India-Europe corridor
oppn parties
RIL Stake Sale To Aramco In Trouble As The Government Seeks Security For PMT Arbitration Award

By Sunil Garodia
First publised on 2019-12-21 11:18:23

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.

The government has moved with alacrity to protect the interests of the country after the debt-ridden Reliance Industries Limited (RIL), owned by the richest man in India, Mukesh Ambani, decided to sell 20 percent of its stake to oil major Aramco of Saudi Arabia. In an application before the Delhi High Court, the government has argued for a restraining order against the sale as RIL is under obligation to pay a monetary compensation under the arbitration award in the Panna-Mukta and Tapti (PMT) gas and oil fields dispute.

The government has contended that since RIL is facing massive debt and is "in the process of selling, transferring, mortgaging, disposing of, alienating and creating third-party interest in the moveable and immoveable properties to cover its debt," it is not sure whether the company has made or will make a provision to pay the final award under the PMT arbitration. Hence, the government, in order to secure its interests, wanted the court to restrain RIL from selling its assets, including the stake sale to Aramco.

The Court decided to take cognizance of this matter and asked the directors of the company to file an affidavit listing its assets. It said that it will take up the matter further in the next hearing in February. This is the correct step. The government will need to secure itself as it might happen that RIL might sell assets and retire its financial and commercial debts to lessen the burden. But it might not provide for the arbitration award or might delay paying it or might not pay it at all.

RIL has disputed the government view by saying that although the final award that was announced in the PMT arbitration was in the nature of a monetary compensation, the amount was not quantified. RIL added that the award has been challenged in British courts and hence, as of now, the company has no liability on his account.

But this is a specious argument. Since the award is in the form of monetary compensation and given that the stakes were very high, the government seems to have arrived at a very conservative figure of Rs 30000cr. If the company is genuinely interested in paying the award to the government, it must show its good intent by either securitizing an asset of that value in favour of the government or depositing the amount with the court from the proceeds of the stake sale to Aramco or in any other way. This should be done notwithstanding the pendency of the appeal in the British courts.

The government, on the other hand, should not pray for a restraining order. Instead, it should ask the court to direct RIL to deposit the amount in a specified account. Putting a stop to the stake sale will send out the wrong signals. RIL should be allowed to go ahead with the stake sale in order to minimize its interest burden and bring in an experienced partner. It will in the interests of the nation. But it should provide security to the government so that the government is able to recover its dues under the arbitration award in the PMT case if it finally goes in its favour.