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Assam resents discounted oil royalty

Rahul Karmakar, Hindustan Times  Guwahati, September 12, 2011
First Published: 17:41 IST(12/9/2011) | Last Updated: 17:43 IST(12/9/2011)

On a day that saw Nagaland villagers take ONGCL and the Union petroleum ministry to take seeking compensation for crude oil contamination, the Assam government demanded an end to payment of oil royalty at discounted price.


In a letter to petroleum minister S Jaipal Reddy, Assam chief minister Tarun Gogoi on Monday sought the protection of state royalty as “we are losing huge revenue” due to payment of crude extraction fee at discounted prices.

“Assam being a producer state should not be denied the benefits of its natural resources and made to compensate for the under-recoveries of the Central oil marketing PSUs,” said Gogoi.

He asked Reddy to pass appropriate orders so that the oil companies pay royalty to the state government on the well head price determined by the actual price of equivalent crude oil prevailing in the international market and not on the sale price.

“The loss of revenue is due to under-payment of oil royalty by ONGCL and Oil India Limited. The issue has also figured in the CAG report, which estimates the loss at Rs. 525crore over a period of 11 months during 2008-2009. Under payment of royalty to Assam is still continuing and increasing,” the chief minister said.

Gogoi also sought Reddy’s intervention for raising the effective royalty rate from the present 16.66% to 20% by modifying the present royalty calculation formula. He further pointed out that VAT and entry tax also need to be paid on the market price of crude oil and not on administratively directed lower price.

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