IPCL case 'headed for' arbitration

The three year-old controversy that dogged the IPCL buy-out by Reliance Petroinvestments (RPIL) may be headed for arbitration.

Sources have indicated that the government is considering putting up the RPIL claims, for a refund of Rs 927.41 crore out of the Rs 1,490.87 crore buy, for arbitration. However, RPIL officials were not available for comment.

While post-disinvestment adjustment claims are common, and have been settled in the past, claims of this magnitude have not been seen.

"Every purchaser asks for the moon. It is part of the business process. Now it is up to the government to examine it diligently," former disinvestment secretary Pradip Baijal said.

RPIL had bagged 26 per cent controlling stake along with managerial control in IPCL in 2003 for Rs 1,490.87 crore, against stiff competition from the state-owned Indian Oil Corporation and Nirma.

After the acquisition, RPIL found there were several outstanding payments that had not been revealed during the acquisition process and hence the indemnification claims, the first of which, for Rs 180.25 crore, was filed before the department of chemicals (DoC) in 2003.

The department had set up a panel to look into the allegations. However, despite dragging on for over three years, the panel has not been able to find the relevant papers to refute the claims.

The then BJP government was advised on the buy-out by the department of disinvestment (DoD) and global consultants, Warburg Dill on Reed.