Hearing of Chevron’s arbitration suit against Bangladesh deffered

NewAge, December 31, 2008

The International Centre for Settlement of Investment Disputes has deferred to May 18 the first hearing in the arbitration suit which the US-based company Chevron had lodged against Bangladesh over the row on wheeling charge worth millions of dollars for the Jalalabad Gas Field, Petrobangla officials said.

‘The hearing of the arbitration was scheduled in December, but the ICSID defer the hearing to May 18 following a Chevron’s appeal for submission of its reply,’ special assistant to the chief adviser, M Tamim, told New Age on Tuesday.

Both Tamim and Petrobangla chairman, Jalal Ahmed, who reviewed the suit with legal adviser, Dr Kamal Hossain, on Sunday, said that Petrobangla had an ‘outstanding chance’ for wining the suit.

The government in July last took decision to face the arbitration suit lodged by the Chevron with the ICSID, demanding back 4 per cent from the gas sale proceeds of the Jalalabad Gas Field it had paid to Petrobangla, in wheeling charge worth millions of dollars over the years.

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

Jalal Ahmed said Chevron was supposed to submit in November a reply to the ICSID on the counter memorandum, which Petrobangla’s legal adviser Dr Kamal Hossain had submitted challenging the suit.

Earlier, Chevron made an appeal to the ICSID for extending the time to till December for the reply and Chevron submitted it in December, he said, adding ‘the ICSID subsequently deferred the hearing schedule to May 18.’

‘We have reviewed the reply of Chevron with Dr Kamal Hossain and found that we have an outstanding chance to win the arbitration as the agreement with Chevron supports our claim,’ said Tamim.

He added, apart from the deal, the predecessors of Chevron, Unocal and Occidental of US, had paid the wheeling charge for four years without lodging any complaint, after the Petrobangla dismissed an Occidental claim for not deducting the wheeling charge.

The government in July last, decided to face the arbitration suit and withdraw a case it had filed against the Chevron with a Dhaka court in April 2006, seeking injunction on the Chevron’s move to go to the international dispute settlement centre.

Chevron claims, the agreement does not have the provision for the deduction and Chevron should not pay the wheeling charge as it is Petrobangla’s duty to supply gas to domestic market.

If the government loses the arbitration suit to Chevron, the US-based company will get millions of dollars from the Jalalabad Gas Field


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