Can't pay extra profit to govt from Barmer block as oil prices crashed: Vedanta in HC

The Delhi High Court has sought the Centre's response on the Vedanta Ltd plea that the contract to operate Barmer oil block be extended till 2030 without having to pay 10 per cent extra to the government as global oil prices have crashed due to COVID-19 pandemic.

Vedanta has contended that if it has to pay additional 10 per cent profit petroleum (PP) to the Centre, then it could "plausibly threaten" continued production from the block in Rajasthan, leading to lower output and impacting the country's energy security.

It could also lead to increase in import dependency as the output from Barmer block accounts for 25 per cent of domestic crude oil, Vedanta has said in its application.

A bench of Justices Jayant Nath and Prateek Jalan issued notice to the Centre and sought its response to the application by May 6 as the production sharing contract (PSC) between Vedanta and the government is to be extended on May 14.

The bench, during the proceedings held via video conferencing, also asked the Centre, represented by central government standing counsel Amit Mahajan, and Vedanta to "co-operate and ensure that the agreement and other formalities are completed in terms of the interim order passed by this court dated July 3, 2018.

The high court, in its July 3, 2018 order, had recorded the mutual agreement of both sides that Vedanta's application for extending PSC from 2020 to 2030 will be processed under a new policy which would entail a 10 per cent increase in the government's share of profits.

However, Vedanta is now seeking modification of the July 3, 2018 order to the extent that it be implemented without asking for the 10 per cent increase in profits.

The application has been moved in the Centre's petition challenging a single judge order of May 31, 2018 directing the government to extend the PSC from 2020 to 2030 on same terms and conditions as of May 15, 1995 when it was first executed.

The July 3, 2018 interim order was passed during pendency of the appeal which is listed for hearing on June 17, 2020 due to the limited functioning of the high court in the wake of COVID-19 pandemic, the application said.