New Delhi: BP’s group chief executive officer Bob Dudley on Monday expressed confidence that there won’t be a return of state control on fuel pricing in India and said that issues such as delay in gas pricing clarity delayed investment decisions.

In response to a Mint’s query about the Indian government’s plan to challenge the decision of an international tribunal that has ruled in favour of Mukesh Ambani-controlled Reliance Industries Ltd (RIL), and its partners BP Plc and Niko Resources Ltd, in a gas migration dispute, Dudley said at a press conference at the India Energy Forum by CERAWeek on Monday, “I think the speed of decision making does and will be faster in the future in India. But the speed of decision making is something that is not good for Brand India. I am very open about my views on this."

The tribunal also awarded costs of $8.3 million to be paid by the government to the consortium. The dispute pertains to a $1.55 billion penalty imposed on RIL, BP and Niko by India for allegedly exploiting gas reserves belonging to state-run Oil and Natural Gas Corp. Ltd (ONGC) in the course of its own drilling activities. The adjacent deepwater fields in question are RIL’s D6 field (KG-DWN-98/3) and ONGC’s KG-DWN-98/2 block, in the Krishna-Godavari (KG) basin off India’s east coast. RIL, BP and Niko Resources together own the D6 block.

“So, we have to one, continue to have confidence in the country and what we do and our investments. And we also have to go through processes like these. And its probably slowed down our investments. Our investments probably would been have faster. But I am confident. I am confident otherwise we wouldn’t be investing this much money," added Dudley whose firm has made a $12 billion investment commitment in India.

The petroleum ministry had raised the demand on 4 November, 2016, giving RIL one month to pay up, after the justice A.P. Shah panel told the ministry on 31 August that RIL should make up for the “unfair enrichment" it had obtained by way of retaining the gains of gas that seeped into its field from ONGC’s. RIL proposed arbitration to resolve the issue. Accordingly, the government nominated G.S. Singhvi, a former Supreme Court judge and former Competition Appellate Tribunal chairman, as its arbitrator. RIL’s nominee on the arbitration panel was Bernard Eder, a former high court judge in the UK.

Dudley added that regulatory slow-downs are not specific to India.

“Regulatory slow-downs happen in many places. It has happened to us in the United States on a massive scale. So, it is not singled out India. But everywhere around the world, everyone in business likes regulations. They want to know what the rules are, what’s the level playing field? And decisions can be made to work within regulations. Its when regulations are clear and decisions are made faster within regulations, as particularly something that holds back investments in any country. And I think I am seeing a trend, I know I am in speeding up decisions and getting things done faster and quicker which can only help India as a country, and all sectors, in particular in the very sensitive energy sector. So again, I am optimistic," Dudley said.

According to a report by DeGolyer and MacNaughton, a US-based consultancy selected by both ONGC and RIL that was relied upon by the Shah panel for confirmation of the gas flow between the blocks, about 11 billion cubic metres (bcm) of gas migrated to KG-D6 from adjacent fields between 1 April 2009 and 31 March 2015, of which 8.9 bcm was tapped by RIL.

Dudley also expressed confidence about no return of fuel price control.

The National Democratic Allance (NDA) government earlier this month effected a 2.50 per litre cut in prices of petrol and diesel to ease inflationary pressure and boost consumer confidence. Out of the 2.50 cut, the Centre will reduce excise duty by 1.50 per litre while state-run fuel retailers will take a hit of 1 for every litre sold. However, the government’s move to ask state-run fuel retailers to take a hit of 1 per litre on petrol and diesel has been viewed as against the spirit of deregulation of fuel prices. Many BJP-ruled states have also cut value-added tax (VAT) on fuel by an equivalent amount at the Centre’s request.

“Well, I think price control will not be good for the sector in the longer term. And I have not heard any, even suggestions, that India will go back to price controls. There have been some reductions, on parts of taxes and whatever and I understand that prices of fuel now are very painful in the country. So, finding a way through that, to make sure that the retail sector stays vibrant and the Indian oil companies stay as vibrant, is very important. And if the price controls are put on that and the Indian oil companies that sell most of the fuel, then reduces their income, it reduces the dividends back to the government," added Dudley whose firm has fuel retail plans in India along with RIL.

The government’s decision has also raised questions about its commitment to keep fuel prices outside its control. In the run-up to 2019 general elections, Fitch Ratings in a recent report on raised the spectre of return of state control on fuel pricing in India. Petrol prices were deregulated in June 2010 by the Congress-led United Progressive Alliance (UPA) government. Prime Minister Narendra Modi’s government decontrolled diesel prices in October 2014. With dynamic fuel pricing introduced in June last year, the NDA government has maintained that it has no role in pricing.

“So, as a cycle here, that there is a whole lot unintended consequences of price controls. Actually, its isn’t that great for the government. So, I think people are working their way through this," Dudley said and added, “And, I recognise that prices are off the fairway of comfort for the world right now and that’s quite painful in India. And its not just India, many countries around the world. But price control wont in the long term solve it."

Moody’s Investors Service in a recent report said that the government’s decision is credit negative for IOCL, BPCL and HPCL and will impact its earnings by 6,500 crore. The effective reversal of fuel price deregulation will also constrain future private sector investments in the sector.