Bangladesh Oil Gas and Mineral Corporation, widely known as Petrobangla, filed a rejoinder against Niko Resources (Bangladesh) Ltd at The International Centre for Settlement of Investment Disputes (ICSID) concerning the compensation declaration requested by Niko.
Petrobangla, along with Bangladesh government Bangladesh Petroleum Exploration and Production Company Limited (Bapex), filed the rejoinder as respondent on September 25.
“We have already submitted our rejoinder against Niko at the tribunal. We have heard that the tribunal will respond within one month,” Md Shafiqur Rahman, secretary at Petrobangla, told the Dhaka Tribune yesterday.
The ICSID is a member institution of the World Bank Group based in Washington, DC. It facilitates arbitration and conciliation of legal investment disputes between international investors and host states.
The three-member ICSID tribunal to resolve this dispute was constituted in 2010 with Michael E Schneider of Germany as its president. On September 11, the tribunal issued a decision on the payment claim, where it asked Petrobangla to pay Niko a significant amount of money in interest.
Petrobangla owes Niko $25,312,747 (around Tk200 crore) plus Tk139,988,337 as per Niko’s invoices for gas delivered from November 2004 to April 2010, the tribunal said.
Petrobangla must pay simple interest on Niko’s invoices at the rate of six-month LIBOR (The London Interbank Offered Rate, the average interest rate estimated by leading banks in London that the average leading bank would be charged if borrowing from other banks) plus 2% for the US dollar amounts and at 5% for the Bangladeshi taka amounts.
Interest is due on the amount of each invoice as from 45 days after delivery of the invoice, but not before May 14, 2007, and until it is placed at Niko’s unrestricted disposition, it directed.
The tribunal also said the entitlement of Bapex to payments under the Gas Purchase and Sale Agreement is not affected by the present decision.
On August 19, 2013, the tribunal issued a single decision on its jurisdiction, involving the two cases brought before it by Niko against Bangladesh government, Petrobangla and Bapex. One of the cases relates to the compensation for the two blowouts while carrying out drilling at the Chattak gas field in Sunamganj, locally known as Tengratila field, on January 7 and June 24 in 2005.
Following the incidents, a government-formed probe committee held Niko responsible for the blowouts and estimated the damage caused. On June 15, 2008, a case against Niko was filed with the Dhaka District Judge’s Court seeking Tk746.5 crore in compensation. The proceedings of this trial are still pending.
Niko brought the case to the ICSID Tribunal, asking whether they should pay any compensation and seeking a declaration that it was not liable.
In the second suit, Niko demanded $35.71m from Petrobangla as payment of gas sales from the Feni gas field. The amount includes $8.55m that Petrobangla owes to Bapex, according to the joint venture agreement.
Petrobangla refrained from making any payment to Niko following a High Court order, unless the company paid the compensation for the Tengratila blowouts.
The High Court gave the verdict on June 17, 2009 in response to a writ filed by Bangladesh Environmental Lawyers’ Association, which had brought public interest litigation against Niko.
The Canadian firm stopped gas production from the Feni field in May 2010.
In 2011, a Canadian court convicted Niko for bribing Bangladesh’s former minister for energy and mineral resources, AKM Mosharaf Hossain, with a Toyota Land Cruiser valued at US$188,000 and other “non-business-related” expenses.