Strategy To Enhance Investments In State

The Gujarat government wants that the royalty should be paid in terms of a share in the crude and lignite produced in Gujarat rather than in cash, as is being done.

A share of the oil and gas will mean higher revenue for the state. It will also enable the state government to attract new investments with the offer of a regular supply of oil and gas, besides helping it to determine which industrial projects to support.

The mode of calculating royalty has been a bone of contention between the governments in Gandhinagar and New Delhi for several years. At one stage, Gujarat had imposed a cess on crude mined in the state. The decision had led to fierce litigation between the state government and the Oil & Natural Gas Corporation. The row was resolved with an upward revision in the rates of royalty.

 

The demand is significant in view of the large finds of oil in the Tapti basin in south Gujarat. The Gujarat government wants to play a key role in the huge petrochemical complex which is coming up in Broach, mostly in the form of investments by central agencies.

The demand in itself is not new. Former Chief Minister Chimanbhai Patel had made it a political issue by citing this as an example of injustice by the Centre. With a coalition government at the Centre, Vaghela is in a better position to fulfil the long-held plans of the Gujarat government to form a pressure group of oil-producing states with the aim of getting a share in produce by way of royalty for the all-round development of the respective states. The Centre cannot take the states for granted, Vaghela said, just before his meeting with Prime Minister Deve Gowda.

Uncertainty about the supply of gas has been a bottleneck in the investment scenario in Gujarat. Nearly half of the total investments envisaged in the state is dependent on the supply of gas, petroleum and petro products.