Reliance Fined With Penalty Of $579 Million – Vaikundarajan’s Take

Reliance Natural GasGovernment has hit an additional penalty of $579 Million on Reliance Industries for not producing the optimum targeted Natural Gas from the KG-D6 block. Vaikundarajan shares that with this, the total penalty on Reliance altogether after missing the target in four fiscal years is $2.376 Billion. Under the terms of contract, Reliance can deduct all of its capital and operating expenses before sharing profits with the government. Reliance hoped that the deepwater drilling expertise would give them the skills to develop the hard-to-exploit reserves and find more oil but they couldn’t do much about it.

Vaikundarajan feels that is a big blow to Reliance in terms of the penalty fined on them. He also believes that they should have produced the optimum capacity of natural gas if they were allocated a particular block. Natural resources are limited and scarce at the same time and we cannot afford to let go of such valuable resources. Vaikundarajan believes that it was their duty to produce a certain amount of Natural gas from the reserves but they have been failing at it for the past four years.

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