The Centre has slapped penalty of around Rs 2,500 crore on Reliance Industries and its partners for producing less than targeted natural gas from eastern offshore KG-D6 fields.
After this, the total penalty, which is in form of barring recovery of cost incurred, for missing the target in five fiscal years beginning April 1, 2010, now is at a accumulative $2.76 billion.
The Production Sharing Contract (PSC) allows RIL and its partners BP Plc of the UK and Canada's Niko Resources to subtract all capital and operating expenses from the sale of gas before sharing profit with the government.
Disallowing costs will result in government's profit share rising.
"Up to 2013-14, the cost recovery proposed to be disallowed was $2.376 billion and subsequent demand of Government of India share of additional profit petroleum of $195.3 million on cumulative basis.
"On June 3, 2016, the company received a revised claim up to year 2014-15 with a disallowance of $2.756 billion on cumulative basis and consequent demand of Government of India share of additional profit petroleum of $246.9 million, also on cumulative basis," RIL said in a regulatory filing.
Gas output from Dhirubhai-1 and 3 gas field in the eastern offshore KG-D6 block was expected to be 80 million standard cubic meters each day but production was only 35.33 mmscmd in 2011-12, 20.88 mmscmd in 2012-13 and 9.77 mmscmd in 2013-14. The output has been about 8 mmscmd in subsequent years.
Centre had for 2010-11 disallowed $457 million of cost, $548 million for 2011-12, $792 million for 2012-13 and $579 million for 2013-14. Now, another $380 million cost has been disallowed for output lagging behind target in 2014-15.
The output was behind target in 2015-16 as well and the government is yet to issue a cost disallowance notice for that.