Government Sends Reliance Industries Notices Demanding Rs 24,500 Crore In Total

While one notice pertains to producing gas belonging to state-owned ONGC Ltd., another is for failing to meet the deadline for setting up a battery cell plant.

PTI

(Photo Source: Ravi Roshan/Pexels)

Billionaire Mukesh Ambani's Reliance Industries Ltd. has been slapped with two separate demand notices by the government—one seeking $2.81 billion (about Rs 24,500 crore) for producing gas belonging to state-owned ONGC Ltd., and another for failing to meet the deadline for setting up a battery cell plant.

The $2.81-billion demand note follows the Delhi High Court's order on Feb. 14, overturning an international arbitration tribunal ruling that held Reliance and its partner BP Plc. of the UK not responsible for paying any compensation for the gas they produced and sold, which had allegedly migrated from adjoining fields.

"Consequent upon the Division Bench judgment, the Ministry of Petroleum and Natural Gas has raised a demand of $2.81 billion on the PSC contractors namely Reliance Industries Ltd., BP Exploration (Alpha) Ltd. and NIKO (NECO) Ltd.,"Reliance said in a stock exchange filing.

Originally, Reliance held a 60% interest in Krishna Godavari basin deep-sea block KG-DWN-98/3 or KG-D6, while BP had 30% and Canadian firm Niko held the remaining 10%.

Subsequently, Reliance and BP took over Niko's interest in the production sharing contract and now hold 66.66% and 33.33%, respectively.

Separately, Reliance said its step-down subsidiary Reliance New Energy Battery Storage Ltd. on March 3 received "a letter from the Ministry of Heavy Industries levying liquidated damages at the rate of 0.1% of the performance security (Rs 50 crore) for each day of delay from January 1, 2025".

The penalty was for the "delay in the achievement of Milestone 1 under the programme agreement executed with MHI in connection with 5 GWh manufacturing capacity awarded under the Performance-Linked Incentive Scheme for Advanced Chemistry Cell", it said.

The liquidated damages or penalty computed till March 3, 2025, was Rs 3.1 crore.

"RNEBSL has requested for an extension of time for achievement of the said Milestone 1," it added.

The firm, however, neither disclosed the reasons for the delay nor the new timelines for meeting the target.

RNEBSL had in 2022 signed an agreement to build 10 GWh battery capacity with production-linked incentives for an estimated $400 million.

The contract was part of government initiatives to get domestic manufacturing for a new energy supply chain developed in India. Besides RNEBSL, Rajesh Exports and the unit of Ola Electric Mobility Ltd too had won bids to build the battery cell plants.

Manufacturers were eligible for Rs 181 crore worth of production-linked incentives on meeting milestones for the project that sought to create a cumulative 30 GWh capacity of advanced chemistry cell battery storage.

The firms winning the PLI were required to achieve a minimum "committed capacity", along with a local value addition of 25% within two years of the agreement, and 50% within five years.

Reliance had previously indicated the second half of 2026 as the timeline to launch operations at its battery Gigafactory in Jamnagar, Gujarat.

On the gas migration row, the government had in 2016 sought USD 1.55 billion from Reliance and its partners for the quantum of gas that had migrated to its block KG-D6 from adjoining fields of ONGC.

Reliance contested the claims before an arbitral tribunal, which in July 2018 upheld that it was not obliged to pay any compensation.

The government filed an appeal and in May 2023, a single judge of the Delhi High Court upheld the arbitration award, dismissing the government's appeal. A division bench of the Delhi High Court last month set aside the single judge order, ruling against Reliance and its partners.

Reliance said the letter of demand was received by the company on March 3, 2025.

"The company is legally advised that the Division Bench judgment and this provisional demand are unsustainable. The company is taking steps to challenge the judgment of the Division Bench of Hon'ble Delhi High Court," it noted.

"The company does not expect any liability on this account," it added.

Reliance had previously said it would appeal the decision in the Supreme Court.

Shares of Reliance Industries Ltd. closed 0.80% lower at Rs 1,161.70 apiece on the BSE, compared to a 0.13% decline in the benchmark Sensex. 

Also Read: Reliance Industries Shares Fall As Delhi High Court Reverses Arbitral Award Dismissal

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