Govt says Cairn India can't export excess crude from Rajasthan

Govt to file an affidavit to this effect before the next court hearing in the case on February 18

The government on Thursday told the Delhi High Court its empowered committee of secretaries has decided that Cairn India, the petroleum arm of Vedanta Resources, cannot be allowed to export excess crude produced at its Rajasthan oil field.

The high court had on January 19 asked the ministry of petroleum and natural gas to place the issue before the committee and come back with a decision. A company spokesperson refused to comment on the matter saying the issue is sub-judice.

Additional Solicitor General Tushar Mehta and government’s Standing Counsel Anurag Ahluwalia on Thursday told the court the committee met on 21 January and decided Cairn cannot be allowed to export the excess crude.

The government said it will file an affidavit to this effect before the next hearing in the case is on February 18. Cairn had petitioned the court last year alleging the government had incurred a loss as the company was forced to sell its share of crude from the field to private players at prices 20 per cent lower than global rates.

The ministry had said the loss to government as calculated by Cairn was "notional". According to the production sharing contract (PSC), Cairn India gets 70 per cent of crude produced from the well and the rest goes to government.

Under the PSC, the government or its nominee can pick up the company's share of crude and the rest could be sold to private players or exported. The court had observed in the previous hearing that if the excess crude was sold at lower rates then ultimately the government would suffer. It had asked the centre to take instructions in two weeks as to whether the ministry was willing to pick up the excess crude or if the company could export it.

Cairn had said it had made several representations to Directorate General of Foreign Trade for permission to export the crude, but did not get any response. Prior to this, it had written to Indian Oil Corporation (IOC) to “canalise” export of the crude, but got no response from it as well.

LEGAL TUSSLE

• Cairn india had sought permission to export excess crude from its Rajasthan oil field
   
• It had alleged the government incurred a loss as the company was forced to sell crude at prices 20% lower than global prices
   
• The government has called Cairn’s calculation of loss notional
   
• It plans to file an affidavit rejecting the export proposal before the next hearing