Anil Agarwal-led Vedanta got a relief when the Supreme Court on Wednesday rejected the government plea challenging an arbitration award allowing the company to recover $499 million instead of $198 million it (government) had capped for developing the Ravva oil and gas fields.
The dispute pertains to the interpretation of the production-sharing contract (PSC) entered into by the parties and, specifically, the recoverability of base development costs (BDCs) incurred by contractors in the Ravva field.
Both the government and Cairn Oil and Gas (a vertical of Vedanta) had entered into a PSC in 1993. According to the agreement, it was decided that the party should carry out the development of the field, including 21 wells, at a capped cost of $188.98 million along with 5 per cent charges, which is known as BDC. The dispute is related to cost recovery for a period between 2000 and 2007.
