Gogoi questions Centre on oil royalty

Assam Chief Minister Tarun Gogoi today questioned the Centre for suggesting the state to go to court for recovering oil royalty at market price when Gujarat was being paid at an updated rate.
"You (Centre) have accepted that our right for royalty at market prices are justified and the Gujarat government is getting it after the Supreme Court verdict. Then why are you not giving it to us?
"What kind of logic is it that you (Centre) are suggesting us to go to court for our legitimate demand? How can there be two different rates? ... For our justified demand, why should we spend public money and go to the Court? This attitude of the Centre is not acceptable. It is not in conformity with the Team India spirit and the federal structure," Gogoi said at a press conference here.

No earlier government at the Centre had suggested any states to go to court for recovering dues from public sector undertakings, he said reacting to Petroleum Minister Dharmendra Pradhan's suggestion yesterday that Assam should approach judiciary for recovering around Rs 10,000 crore of pending oil royalty from PSUs.
Pradhan had in April last year supported the Assam government's claim of royalty on crude from PSU firms, including ONGC and OIL, at a pre-discounted rate in line with a Supreme Court order.
Gogoi said in December 2014 Assam government had already approached the Gauhati High Court for the direction but did not know the exact case status.

The Chief Minister had mentioned the issue in a memorandum to Prime Minister Narendra Modi during his two-day visit to Assam in November 2014.

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.
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The Supreme Court, in its interim order, had directed ONGC to pay oil royalty to Gujarat at pre-discounted crude price beginning from February 1, 2014.
Earlier, Gujarat High Court hearing a petition filed by Gujarat government held that 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.