NEW DELHI: To dispel CPI leader Gurudas Dasgupta’s allegation of collusion with KG basin gas exploring contractor Reliance Industries Ltd (RIL), the ministry of petroleum and natural gas last week disallowed cost recovery of $1.8 billion to RIL for underproduction of gas for 2012-13.In its November 14 letter to RIL, the ministry informed the contractors (RIL) that they were “not entitled to recover cost of $1.8 billion on account of underutilization of the assets resulting in considerable reduction in production of gas vis-a-vis committed gas production rates”.The ministry had similarly disallowed cost recovery of $457 million for 2010-2011 and $1billion for 2011-12, accusing RIL of deliberate underutilization of assets, resulting in underproduction of gas from KG basin .RIL had disputed the government’s claim and initiated arbitration proceedings for disallowing cost recovery for 2010-2011 and 2011-2012. Member of Parliament Dasgupta had petitioned the Supreme Court challenging the revision of price of natural gas and also alleged collusion between the government and RIL. He had also sought stay on arbitration proceedings.Under the arbitration clause in the production sharing contract (PSC), RIL has appointed former Chief Justice S P Bharucha as its arbitrator. The ministry chose ex-CJI V N Khare as its nominee.As the ex-CJIs failed to reach consensus on an umpire arbitrator, RIL moved the SC seeking appointment of the third arbitrator to facilitate commencement of arbitration proceedings for resolution of the dispute on disallowance of $1 billion cost recovery to it for the two financial years.Ministry officials said the November 14 letter would be used by the government to counter Dasgupta’s collusion charges in the SC when it files the affidavit responding to the allegations in the MP’s PIL.Petroleum minister Veerappa Moily filed an affidavit in the SC on Tuesday and rejected Dasgupta’s allegation that he favoured RIL. He termed the allegations as “baseless, false, reckless and politically motivated” and sought deletion of his name from the list of respondents in the PIL.“As such, the arraying of Respondent No.2 (Moily) as a party is entirely mischievous and misconceived and an attempt to derive political mileage and sensationalize the issue. This practice of impleading persons, without there being any prayer which is specifically sought against them, ought to be deprecated by the Supreme Court,” Moily said.“The allegation in the petition that ‘the present minister was inducted to do Reliance’s bidding’ is absolutely baseless, without any substance and as a matter of fact defamatory. The baseless allegation not only defames this respondent (Moily) but also the entire process of Cabinet formation and allocation of portfolios,” he said.“Apart from this, it is submitted that Respondent No.2 has not done any favour to Reliance Industries Ltd and that no orders have been passed junking arbitration as alleged by the petitioner,” said the affidavit drafted by advocate Devadatta Kamat.“The third arbitrator would be appointed either by the arbitrators nominated by the parties or by the Supreme Court, as per the provisions of the PSC. It may be seen that the arbitration has been initiated by the contractor (RIL) and not by the government and hence, there is no way by which the Respondent No.2 (Moily) has stalled or in fact could have stalled the arbitration proceedings,” he said.On the controversy relating to work allocation of joint secretaries, Moily said he had taken the decision with the intention of harmonizing and synergizing the work that had been already allocated to the joint secretaries.“Earlier, the joint secretary (international cooperation) was in charge of gas allocation and joint secretary (exploration) was in charge of gas pricing. Respondent No.2 initially felt that it would be prudent to have one joint secretary looking into both gas pricing and its allocation. It is also relevant to note that on reconsideration, the work allocation of gas pricing was restored back to joint secretary (exploration) till further orders. The petitioner has deliberately concealed this fact from the court,” he said.