International Centre for Settlement of Investment Disputes (ICSID) posts first hearing of the Chevron suit against Bangladesh

Aminul Islam, NewAge, August 8, 2008. Dhaka, Bangladesh

The International Centre for Settlement of Investment Disputes has posted for December 1 in The Hague the first hearing in the arbitration suit which US-based Chevron had lodged against Bangladesh over the row on wheeling charges for Jalalabad gas, Petrobangla officials said.

The centre, an institution of the World Bank group, deferred the hearing date from August 5 till December 1 at the request of the Bangladesh delegation, led by the government’s legal adviser Kamal Hossain, as the government was not prepared for the hearing.

The government earlier requested the dispute settlement centre to defer the hearing from August 5 till October 23, but the centre set a condition that a delegation would need to be present in The Hague on August 5 to defer the hearing, the officials said.

The three-member Bangladesh delegation which also included Petrobangla’s chairman Jalal Ahmed and an Energy Division joint secretary appeared before the three-member arbitration panel in The Hague. ‘The centre has posted for December 1 the first hearing. It has also allowed us to submit the counter-memorandum or reply of case in September,’ Jalal told New Age on Thursday after returning to Dhaka.

The government in July decided to face the arbitration suit and to withdraw the case it had filed against Chevron. Petrobangla filed the case against Chevron with a Dhaka court in April 2006 seeking injunction on Chevron’s move to go to the international dispute settlement centre. Chevron filed the suit with the dispute settlement centre demanding back 4 per cent of the gas sales proceeds from the Jalalabad gas field it had paid to Petrobangla in wheeling charge over the years.

Petrobangla deducts 4 per cent from the gas bills it pays to the company saying the agreement stipulates that the company is supposed to pay the wheeling or transmission charge to supply the Jalalabad gas to domestic market.

Chevron claims the agreement does not have the provision and Chevron should not pay the wheeling charge as it is Petrobangla’s duty to supply gas to domestic market. There has been sustained pressure on the government from the United States and other development partners to withdraw the case against Chevron.

If the government loses the arbitration suit, Chevron will get millions of dollars in monetary terms from the Jalalabad gas field and Moulvibazar and Bibiyana fields which have a combined reserve of more than 3 trillion cubic feet. Moulvibazar and Bibiyana have the same disputes over wheeling charges.


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