Centre to slap recovery notice on Vedanta’s Cairn Oil and Gas after Delhi HC judgment – Business News , Firstpost

The oil ministry is about to search thousands and thousands of {dollars} from Vedanta’s Cairn Oil and Gas after the Delhi HC held that the agency was liable to pay larger revenue share to the government

Representational picture. PTI

New Delhi: The oil ministry will search tens of thousands and thousands of {dollars} from Vedanta’s Cairn Oil & Gas after the Delhi High Court held that the agency was liable to pay the next revenue share to the federal government in lieu of its Rajasthan oil and gasoline block license being prolonged past the preliminary time period, a high official mentioned.

In the interim, the agency’s Barmer basin block licence, whose preliminary 25-year time period ended on May 15, 2020, has been given an eighth interim extension, the official, who wished not to be recognized, mentioned.

“Now that the Delhi High Court has upheld the government policy, we will issue recovery notices seeking higher profit petroleum since May 15, 2020,” he mentioned. “The exact amount is being calculated but it will be in tens of millions of dollars.”

When contacted, an organization spokesperson mentioned, “We are in the process of reviewing the court’s order, will assess any next course of action” after that.

The Union Cabinet headed by Prime Minister Narendra Modi had in March 2017 authorized a coverage for extension of manufacturing sharing contracts (PSCs) for oil and gasoline blocks past their preliminary time period. This coverage offered that the federal government’s share of revenue petroleum (incomes from sale of oil and gasoline after deducting all bills) can be 10 per cent extra through the prolonged interval.

Vedanta’s Cairn sought a 10-year extension of Rajasthan PSC, which the federal government authorized. But the agency challenged in Delhi High Court the situation for added revenue petroleum. A single-choose bench of the Delhi High Court in May 2018 upheld the corporate place that the extension has to be on the identical phrases and circumstances as the unique licence.

The authorities challenged the order earlier than a division bench, which on March 26 this yr dominated that “there cannot be an extension of the Production Sharing Contract unconditionally, on the same terms and conditions which were prevailing 25 years ago i.e. on 15 May, 1995, the effective date.”

It put aside the May 2018 single choose order.

“In effect what the Delhi High Court has said is that the company has to pay higher profit share after May 15, 2020. So the company is now liable to pay higher profit petroleum for the period they operate the block post-May 15, 2020,” the official mentioned.

Vedanta, he mentioned, has the choice to not agree to the federal government situation and relinquish the block.

“Even in that case, the company is liable to pay additional profit petroleum for the period they operate the block post-May 15, 2020,” he mentioned.

The further revenue petroleum will likely be as well as to over $520 million that the federal government has sought from the corporate in a separate price recovery dispute within the Rajasthan block – the mainstay oil and gasoline block of Vedanta.

The authorities claims further revenue petroleum after re-allocating Rs 2,723 crore frequent price between completely different fields within the block and disallowance of Rs 1,508 crore price on a pipeline.

The firm has challenged the demand by means of arbitration.

It additionally had a dispute with its accomplice state-owned Oil and Natural Gas Corp (ONGC) over investments made within the block, which held up the computation of the federal government’s share of revenue petroleum for fiscal years ending March 31, 2019, and March 31, 2020.

ONGC holds 30 per cent curiosity within the block whereas Cairn Oil & Gas, a unit of Vedanta Ltd, is the operator with a 70 per cent stake.

Sources mentioned the Directorate General of Hydrocarbons (DGH) had approach again in May 2018 raised a requirement for a further share of revenue oil for the federal government after disallowing Rs 1,508 crore out of the fee incurred on laying a heated pipeline to transport Barmer crude and Rs 2,723 crore within the reallocation of sure frequent prices.

These prices pertain to solely Cairn’s share within the Rajasthan block as ONGC has agreed to pay the federal government if these prices are disallowed.

In all, Rs 4,828 crore, together with curiosity, is being sought to be disallowed for 2017-18 fiscal.

The firm had beforehand acknowledged that it believes that it has ample in addition to an inexpensive foundation for having claimed such prices and for allocating frequent prices between completely different fields.

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