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OVL seeks arbitration against Sudan govt

ONGC Videsh Ltd, the international arm of state-owned Oil and Natural Gas Corporation, has decided to invoke arbitration proceedings against the Government of Sudan to settle claims arising from the $200 million (Rs 1,000 crore) petroleum products pipeline project it has executed in that country. Anupama Airy reports.

business Updated: May 03, 2009 22:34 IST
Anupama Airy

ONGC Videsh Ltd (OVL), the international arm of state-owned Oil and Natural Gas Corporation (ONGC), has decided to invoke arbitration proceedings against the Government of Sudan to settle claims arising from the $200 million (Rs 1,000 crore) petroleum products pipeline project it has executed in that country.

“OVL, with the approval of its board, is invoking arbitration against the ministry of energy and mining (MEM), government of Sudan for safeguarding its interest,” OVL informed the petroleum ministry in an April 24 letter.

OVL clarified that it had sought the advice of the Indian Ambassador in Sudan, keeping in mind the diplomatic relations between the two countries. The ambassador advised that “If OVL feels it has the documents and legal authority to back its claims, it should sue the MEM.”

The Ambassador conveyed that “OVL’s deal with MEM is a commercial venture. The dispute should be tackled commercially”, OVL has said.

The 741-km pipeline project for transporting petroleum products to Port Sudan on the Red Sea was given to OVL by the ministry of energy and mining, Sudan for a cost of $194 million.

The pipeline project was in turn sub-contracted by OVL to Dodsal — a Khilachand group company based in Dubai — at a cost of $133 million.

Dodsal, after the completion of the project, had raised additional claims of $37 million which in turn were taken up for settlement with the government of Sudan, OVL informed the ministry.

However, despite pursuing the settlement of claim issue at various levels — including diplomatic channels — there has been no response from the Sudanese government, OVL added.

“Dodsal has now initiated arbitration proceedings against OVL through a notice in December 2008,” the letter stated, adding that while preparing the defence in Dodsal’s arbitration case, India’s Additional Solicitor General KP Pathak, too, has opined that “OVL should immediately initiate arbitration against the MEM, government of Sudan.”