Political lubrication helps Guwahati

ONGC, Oil India pay disputed amount to Assam after state and Centre coordinate stands on Congress-era disputed legacy

The same political party ruling at the Centre and the state has come as a bonus for the Assam government, with the Union petroleum ministry prevailing upon Oil India Ltd (OIL) and Oil & Natural Gas Corporation (ONGC) to pay Rs 1,450 crore to the state in royalty.

The royalty amount was disputed by ONGC with both the Gujarat and Assam governments, for being calculated at a pre-discounted rate. Oil producing companies share the subsidy burden of the government and the oil marketing companies (OMCs) by way of discounts.

The two companies might end up paying another pending royalty amount of Rs 10,000 crore to Assam for 2008 to 2014, depending on how a Supreme Court verdict goes. The current payment was for pre-2014.

Union petroleum minister Dharmendra Pradhan said "injustice" had been done to Assam for political reasons on payment of royalty. Both Pradhan and state finance minister Himanta Biswa Sarma alleged a political conspiracy by the then Congress government at the Centre to weaken the Gujarat government under Narendra Modi, in the decision to pay at a post-discounted rate.

The handing over the payment cheques on Thursday was a political event, with a number of BJP leaders present in Assam Bhawan here. Sarma said they would have moved a censure motion against Manmohan Singh in the state legislative assembly had he not been the prime minister. "We thanked Pradhan in our Budget speech," he said.

The minister said the natural resources of a place belong to the people living there and, hence, it was proper that full royalty be paid to Assam for the oil explored there.

The minister said he asked the Assam government to approach the court for recovering around Rs 10,000 crore of oil royalty from the two PSU firms. Following this, the state which was the under Congress rule, filed a petition at the high court in Guwahati in December 2014. The court ordered the two companies to pay the royalty amount in two tranches.

Of the payment made on Thursday, OIL's share is Rs 1,149.24 crore and ONGC's is Rs 300.64 crore. Upstream (meaning, exploration and production) companies like ONGC and OIL are liable to pay royalty to states on production of crude oil at 20 per cent on the wellhead price, subject to certain deductions.

Effective from 2008-09, the royalty to all states was being paid on the post-discount price of crude oil realised by ONGC and OIL from the public sector OMCs.