'Cairn can't export crude till India attains self sufficiency'

The government today told the Delhi High Court that Cairn India cannot be permitted to export excess crude from its Rajasthan oil field, till India attains "self sufficiency".
"The stand of the central government is unequivocal and unambiguous that as a national policy, export of crude oil is not permitted till India attains self sufficiency," the Centre told a bench of Justice Manmohan.
The submission was made by the Ministry of Petroleum and Natural Gas which is opposing Cairn's request for permitting them to export crude oil.
Additional Solicitor General (ASG) Tushar Mehta, who was assisted by central government standing counsel Anurag Ahluwalia, said, "It is admitted position that between the parties that a Production Sharing Contract (PSC) is entered into by and between the parties and that the petitioner is governed by the terms of the said PSC which prohibits export till India attains self sufficiency."

ASG further said that, "whether to permit exports of crude oil exploited from the fields located within the territory of India (at a time when the country itself is suffering from huge deficit in demand and supply of hydrocarbons and is primarily dependent on imports), essentially falls within the realm of a policy decision, which is to be taken by the government keeping in mind the national interest and large public purpose.
"The decision of the government not to permit export of the oil produced by the petitioner is a policy decision taken by the government, which cannot be in anyway termed to be an arbitrary, irrational or a mala fide decision warranting interference by this court," the Centre submitted.

The court asked the government to show it the copy of the policy under which Cairn was denied permission.

While listing the matter for further hearing on May 18, it also asked them to inform whether there was any law or any contract under which they can restrict Cairn from selling their crude abroad.
Earlier, Cairn had contended that a loss of Rs 1,400 crore has been caused to government as the company was forced to sell its share of crude from its Rajasthan oilfield to private players at prices 20 per cent less than global rates.
The contention was opposed by the ministry which had told the court that the loss to government as calculated by Cairn was "notional" and the company was incurring no loss either, as it was selling the crude not picked up by PSUs or the government to private domestic players.

Cairn said as per the PSC it has with the government, it gets 70 per cent of crude produced from the well and rest goes to government.
Under the PSC, the government or its nominee can pick up the company's share of crude and what is not picked up, could be sold to private players or exported, Cairn said.
However, after the crude is sold, government gets 70 per cent of the profits, it told the court.
It claimed that as a result of selling the excess crude to private domestic companies like Reliance and Essar, at rates lower than international prices, government was losing about Rs 4.5 crore per day.

Cairn had said it had made several representations to Directorate General of Foreign Trade (DGFT) for permission to export the crude, but did not get any response. Prior to this, it had written to the Indian Oil Corporation Limited (IOCL) to "canalise" export of the crude, but got no response from it as well. IOCL is the canalising agent for export of crude.
Canalising agents are those through which a product can be imported or exported by companies which do not have permission to do so directly.