Vedanta wins arbitration case against government in $ 1.1 billion disallowance case

28 Aug 2023 , 09:12 AM

Vedanta Ltd has won an arbitration against a claim for a greater payout from its lucrative Rajasthan oil and gas assets, following the disallowance of Rs 9,545 crore (USD 1.16 billion) in certain costs spent.

The government had also requested a share of the oil and gas fields after reallocating certain expenditures among the fields in the block and disallowing a portion of the cost of establishing a pipeline to evacuate oil produced in the Rajasthan block.

The company stated in its filing with the bourses, ‘The company has received an arbitration award dated August 23, 2023, upholding the company’s contention that additional profit petroleum, on account of Director General of Hydrocarbon (DGH) audit exceptions in relation to allocation of common development costs across Development Areas and certain other matters, is not payable as per terms of the Production Sharing Contract for Rajasthan Block.”

According to the deal, corporations are entitled to recoup all costs before splitting profits with the government in a predetermined ratio. If a portion of the cost is rejected, it will result in more profits and a higher share for the government. Vedanta filed an arbitration complaint against such demand.

At around 9.17 AM, Vedanta was trading 1.39% higher at Rs 236.55, against the previous close of Rs 233.30 on NSE. 

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