LafargeHolcim Bangladesh has decided to pay the disputed amount of Tk 90.25 crore to Jalalabad Gas Transmission company as per an order of the court.
However, the arbitration process under the United Nations Commission on International Trade Law (UNCITRAL) will continue. So, if LafargeHolcim gets the verdict in its favour, the state-run company will have to adjust the amount later, the multinational cement maker said.
The disclosure was made on the website of the Dhaka Stock Exchange yesterday.
After the news broke, shares of the cement maker dropped 0.84 per cent to Tk 58.80.
In February, LafargeHolcim decided to go to arbitration to settle a dispute with Jalalabad Gas after the latter charged higher than the agreed price for natural gas.
The sales deal came into effect in 2003 for the cement company's plant located at Chhatak in Sunamganj. The agreement is valid until the end of 2025.
Under the contract signed with Lafarge Surma Cement, the former name used by LafargeHolcim Bangladesh, the natural gas was priced at about Tk 7.80 per cubic metre.
The Bangladesh Energy Regulatory Commission (BERC) set the price of gas for industrial consumers at Tk 10.70 per cubic metre with effective from 2019.
The dispute shall be adjudicated before the arbitration tribunal under the UNCITRAL, LafargeHolcim said in the disclosure.
The arbitration proceedings are presently continuing, it said.
The Appellate Division of the Supreme Court of Bangladesh ordered LafargeHolcim to make the payments in instalments.
The court instructed it to pay as per the BERC rate going forward, which is approximately Tk 4.20 crore per month.
The order came after LafargeHolcim appealed to the higher court seeking interim protection so that the gas supply is not stopped during the arbitration proceeding.
The dispute will be determined by the arbitration tribunal, and the court's order will have no impact on the merits of the dispute that will be adjudicated by the tribunal, LafargeHolcim said.
If the arbitration tribunal passes an award in favour of LafargeHolcim, it will be entitled to recover the entire disputed amount paid to Jalalabad Gas.
Accordingly, the payment to Jalalabad Gas would be treated as advance or deposit paid pending disposal of the arbitration, it said.