Centre To Pay Gujarat, Assam Rs 14,715-Crore Royalty On Behalf Of ONGC, Oil India
Royalty payment ends 13-year-old disputes between oil companies and states.
The Centre has agreed to pay the Assam government Rs 6,323 crore as royalty for onshore drilling by two public sector oil exploration companies--Oil and Natural Gas Corp. Ltd. (ONGC) and Oil India Ltd. (Oil India)--after the parties involved settled the dispute.
With the parties reaching an agreement, the Supreme Court on Tuesday disposed of cases related to the royalty payout.
The Centre has agreed to pay Assam in three instalments – 15 percent in 2016-17, 45 percent in 2017-18 and 40 percent in 2018-19, according to the minutes of settlement meeting. Officials of the petroleum and natural gas ministry, state government, ONGC and Oil India had met on Friday to thrash out the pact, the minutes of which were submitted in the apex court.
Citing its records in the meeting, the state government had claimed a royalty of around Rs 6,820 crore. According to the final agreement, ONGC is liable to pay Assam Rs 1,350 crore and Oil India Rs 4,973 crore. The Centre will make the payout on behalf of the two companies.
A bench presided by Justices J Chelameswar and S Abdul Nazeer recorded the statement of agreement.
The apex court had on Monday disposed of a similar case between ONGC and the Gujarat government involving a royalty payment of Rs 8,392 crore, after the Centre agreed to foot the bill.
The Oilfields (Regulation and Development) Act of 1948 mandates oil producers to pay 20 percent of the market value of crude they extract as royalty to the state where oil blocks are located.
The Centre had said in 2003 that the burden of lower recovery because of subsidy offered on diesel, kerosene and LPG to consumers be shared by all the stakeholders and not oil marketing companies (OMCs) alone. It directed upstream companies, including ONGC, to sell crude to the OMCs at a discounted rate.
From 2008, ONGC started paying royalty to state governments on the net or actual price realised from refiners after factoring in fuel subsidy discounts, leading to a dispute.
In 2013, the Gujarat high court had directed ONGC to pay royalty to the state on the gross bill price of crude.
The Supreme Court later directed ONGC to pay royalty to Gujarat at a pre-discount rate on February 1, 2014. The explorer has so far paid part of its Rs 10,000-crore dues to the Gujarat government.