Billionaire Anil Agarwal-led Cairn India’s Rajasthan oil block licence extension is caught in a dispute over price and the agency is actually surviving on month-to-month extensions by the federal government, sources stated.
The federal government had in October 2018 agreed to increase by 10 years the contract for Barmer fields in Rajasthan after the expiry of the preliminary 25-year contract interval on Could 14, 2020. This extension was topic to Vedanta Group agency agreeing to boost the share of the federal government’s revenue from oil and fuel produced from the block by 10 per cent.
Whereas Cairn protested in opposition to the extra payout and took the federal government to courtroom, the extension was subsequently held up because of the authorities claiming extra 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, sources aware of the event stated.
The federal government desires the corporate to clear the dues earlier than the extension is granted, they stated including the corporate has disputed the demand and issued a discover of arbitration to resolve the variations.
Pending decision, the federal government first gave the corporate a three-month extension of the manufacturing sharing contract (PSC) for the Rajasthan block, which homes the prolific Mangla, Bhagyam and Aishwariya oilfields, until August 15, 2020.
It subsequently prolonged the PSC by 15 days after which by a month until September 30, sources stated.
When contacted, an organization spokesperson stated, “The Rajasthan PSC permits extension on the identical phrases for a interval of 10 years in case of business fuel manufacturing and we’re accordingly eligible for the extension.” The block, it stated, produces greater than 20 per cent of India’s crude oil manufacturing and has the potential to double this over the following three years.
“This requires a discount in fiscal levies and administrative assist for well timed approvals,” the spokesperson stated. “We’ve referred just a few issues to arbitration that we weren’t in a position to mutually resolve.” The corporate, nevertheless, refused to present particulars.
“We’re hopeful to see some optimistic outcomes, we’re dedicated to supply on this block and contribute considerably in direction of a self-reliant financial system,” the spokesperson added.
Sources stated the Directorate Normal of Hydrocarbons (DGH), the upstream nodal authority of the Oil Ministry, on October 26, 2018, granted its approval for a ten-year extension of the Manufacturing Sharing Contract (PSC) for the Rajasthan Block (RJ), with impact from Could 15, 2020 topic to cost of extra revenue petroleum.
Cairn challenged it earlier than the Delhi Excessive Courtroom and the matter is sub-judice.
The corporate additionally had a dispute with its companion state-owned Oil and Pure Gasoline 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 & Gasoline, a unit of Vedanta Ltd, is the operator with a 70 per cent stake.
Sources stated DGH had method again in Could 2018 raised a requirement extra 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 move 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 four,828 crore, together with curiosity, is being sought to be disallowed for the 2017-18 fiscal.
The corporate believes that it has adequate in addition to an inexpensive foundation for having claimed such prices and for allocating frequent prices between completely different fields, sources stated including it believes that the situations linked to PSC extension are untenable.