Centre to support Assam against oil PSUs on royalty issue

The Centre today said it will support Assam's stand in the legal procedure the state will undertake against the public sector oil companies regarding the royalty issue.
"In our meeting today, we resolved to support Assam and to proceed in the matter legally. The Central government will definitely help Assam and will ask the oil companies to pay after the legal procedure," Petroleum Minister Dharmendra Pradhan said at a press conference here.
From 2014, about Rs 1,450 crore are due from Oil India and ONGC to Assam after the Supreme Court gave an interim relief to Gujarat, he claimed.
The Centre has already asked the companies to pay the amount after the legal procedure, he said.

Attacking former Prime Minster Manmohan Singh and former Assam Chief Minister Tarun Gogoi, Pradhan said: "The state was represented by the PM and I never understood why the state was neglected so much. In Centre and state, there was Congress government.
"When I had met Tarun Gogoi, I said that I would like to help him... He filed a writ petition and was sitting over it for two years."

Assam government had filed a petition in 2014 at Gauhati High Court regarding the royalty issue.
The Ministry of Petroleum and Natural Gas has been allowing ONGC and OIL to supply crude to oil marketing companies at highly discounted rates and has asked the producers to pay royalty to the states on the basis of such subsidised prices.

The Tarun Gogoi-led Assam government claimed many times that the amount of discount has at times been as high as 90 per cent or more and this has handed the state a cumulative loss of revenue of more than Rs 10,000 crore since 2008-09.
The Supreme Court, in its interim order, had directed ONGC to pay oil royalty to Gujarat at pre-discounted crude price beginning February 1, 2014.
Earlier, the Gujarat High Court, in a petition filed by the Gujarat government, held that the royalty should be payable to the state at market price of crude oil and not post-discount price.

Assam government has been demanding that the state gets its share of royalty on crude and VAT as well as other taxes at actual market price and not on the basis of heavily discounted sale price as is the case of Gujarat.
Upstream companies like ONGC and OIL are liable to pay royalty to the states on production of crude oil at 20 per cent on well head price, subject to certain deductions.
Besides, such firms are also liable to pay VAT at 5 per cent on sale of oil.