Millennium Post

Oil royalty: Assam Govt moves Gauhati high Court

“We have recently filed a petition to Gauhati High Court regarding the royalty issue by oil producers. We want the high court to direct the companies to pay royalty to Assam as per the Supreme Court decision regarding a petition by Gujarat,” Assam Chief Minister Tarun Gogoi told reporters here. The Supreme Court in its interim order had directed ONGC to pay crude oil royalty to Gujarat on pre-discounted crude price beginning 1 February, 2014.

Earlier, the Gujarat High Court on a petition filed by the Gujarat government had held that the royalty should be payable to the state on market price of crude oil and not on post-discount price.

Gogoi had strongly mentioned the issue in a memorandum submitted to Prime Minister Narendra Modi during his two-day visit to Assam on November 29-30. “The amount of discount has at times been as high as 90 per cent or more. This has resulted in cumulative loss of revenue of more than Rs 10,000 crore to Assam since 2008-09. You would agree that a special category state like Assam cannot afford such a huge loss of revenue,” the Chief Minister had said in the memorandum.

“Moreover, the oil producing states like Assam should not be denied the benefits of their natural resources and made to compensate for the under recoveries of the central oil marketing PSUs. In the past, I had raised this issue many times with the Petroleum Ministry and Finance Ministry,” Gogoi said. “I would therefore like to request you to kindly ensure that Assam gets its share of royalty on crude oil and VAT as well as other taxes on actual market price and not on the basis of heavily discounted sale price as in the case of Gujarat,” Gogoi added.

The memorandum said upstream companies like ONGC and OIL, engaged in exploration of crude oil, are liable to pay royalty on production of crude oil at 20 per cent on well head price, subject to certain deductions, to the states.

Besides, such firms are also liable to pay VAT at 5 per cent on sale of crude oil.

However, the Ministry of Petroleum and Natural Gas has been allowing ONGC and OIL to supply crude oil to the oil marketing companies at highly discounted rates. The ministry has asked the producers to pay royalty on crude oil to the states on the basis of such subsidised price.
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