With Aam Aadmi Party leader Arvind Kejriwal making hike in gas prices a poll issue, Oil Minister M Veerappa Moily has written to Prime Minister Manmohan Singh saying Reliance Industries' contract for KG-D6 gas fields cannot be terminated pending arbitration on the issue of shortfall in production.

While the contract provides for termination in case of a default by a contractor, the Oil Ministry under S Jaipal Reddy in May 2012 had slapped a penalty of $1.005 billion on RIL
for failing to produce natural gas in line with the pre-stated targets.

RIL disputed the order and initiated arbitration. "In view of the contractual provision under the PSC (production sharing contract), the government will not be able to terminate the contract on account of shortfall in production as the matter is pending before the arbitral tribunal," Moily said in his letter to the Prime Minister.

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