The International Centre for Settlement of Investment Disputes (Icsid) has fined Canadian company Niko Resources $42 million in connection with the devastating explosion at the Tengratila gas field in Sunamganj, citing irreparable damage to gas resources and the environment.
The amount equals about Tk513 crore in Bangladeshi currency.
Petrobangla Chairman Engineer Rezanur Rahman confirmed the verdict to Dhaka Tribune on Thursday night.
According to Petrobangla sources, the ruling ordered Niko to pay $40 million for the loss of 8 billion cubic feet of gas that burned during the explosion and $2 million for environmental and other damages, bringing the total compensation to about $42 million.
Bangladesh had sought $118 million for gas losses and $896 million for overall state losses. The country had also applied to include compensation for environmental and health damages.
“Icsid has ordered Bangladesh to be paid $42 million as compensation. Now further legal steps will be taken swiftly after consulting lawyers,” Rezanur Rahman told DhakaTribune.
Two major explosions occurred on January 7 and June 24, 2005, due to Niko’s negligence while drilling wells at the Tengratila gas field in Chhatak upazila of Sunamganj. The incidents led to massive waste of gas resources and exposed the environment and local residents to serious health risks. The gas field has remained abandoned since the explosions.
Following the Tengratila incident, Bangladesh initially demanded Tk746 crore in compensation from Niko, which the company rejected outright. Petrobangla then stopped paying gas bills for Niko’s Feni gas field. In response, Niko filed a case in a local lower court in 2007.
When the matter moved to the higher court, the High Court ordered the confiscation of all Niko’s assets in Bangladesh and canceled its contracts. Niko appealed the order to the Supreme Court, but the verdict there also went in Bangladesh’s favor.
In 2010, Niko filed two cases with the Icsid seeking payment of withheld gas bills and challenging Bangladesh’s refusal to pay compensation. After a prolonged process, Icsid ruled in 2014 that Petrobangla must pay outstanding dues related to the Feni gas field.
However, the latest ruling has now conclusively settled Niko’s liability and compensation over the Tengratila explosion.
Although the verdict was finalized last month, it was not formally announced. As a result, Petrobangla refrained from commenting on the matter until now, according to a Petrobangla official.