Centre release last trench of Oil Royalty to Assam

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The Union Petroleum Ministry today released  Rs 773 crore of oil royalty, last tranche of oil royalty arrears due to Assam.

This was announced by Union Petroleum Minister Dharmendra Pradhan and also shared by Assam Finance Minister Dr Himanta Biswa Sharma.

“Now we’ve received entire arrears of ₹6306 cr over last 3 FY which was denied by then PM Dr Manmohan Singh” said Dr Sharma.

According to sources, during the period from April 2008 to June 2016, the Assam government incurred loss of crude oil royalty of approximately Rs 7,755.88 crore. The revenue loss happened as the oil producing companies paid the royalty to the oil-producing States like Assam and Gujarat at discounted prices.

However in July 2016, the Government of India ordered both the ONGC and the OIL to pay Assam royalty at the pre-discounted rates from February 2014.

Official data indicate that the oil-producing companies have already paid Rs 4,834.42 crore in four installments. In August 2016, OIL and ONGC paid the first installment of Rs 1449.88 crore. The subsequent installments of Rs 945.90 crore; Rs 670 crore; Rs 1,311.78 crore; and Rs 456.86 crore were released by the Ministry of Petroleum and Natural Gas.

According to the Oil Field Act, OIL and ONGC are required to pay 20 per cent royalty on price of crude oil it extracts from onland oil blocks to the respective State governments.

But the Government of India, in a 2004 order, asked OIL and ONGC to share a part of the subsidy on petrol, diesel and cooking fuels — LPG and kerosene — by way of giving discount of crude oil they sell to refineries. In 2008, the Government asked them to pay royalty on the discounted price, thereby having a negative impact on the revenue of oil producing States.

In 2011, the Gujarat government filed a petition before the Gujarat High Court, stating that it should be paid royalty at the market rate. The High Court ruled in its favour in November 2013. Though the ONGC challenged the decision in the Supreme Court, the apex court asked the company to pay Gujarat at gross or pre-discount price during pendency of the petition.

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