Gujarat Chamber of Commerce & Industry (GCCI) has said the Central government's decision to raise the ad hoc royalty rate on crude oil from Rs 800 to Rs 850 per metric tonne with retrospective effect from 12 December, 1999, is highly inadequate, compared to the prevalent international price of crude oil and expectations of the people of Gujarat.
GCCI president Kalyan J Shah said the Central government should grant reasonable compensation to oil producing states such as Gujarat and Assam, as crude oil is a depleting natural resource.
In fact, the proprietary rights of these states should be protected and they should not be deprived of the legitimate resource belonging to them, he stressed.
Emphasising that royalty on crude oil should be based on either the administered price of petroleum products or import parity, whichever is higher, Shah said: "While royalty on crude oil may be fixed at the rate of 40 per cent on such estimated price and 20 per cent of value of gas on ad valorem basis on the entire production of gas, revision of royalty should be done annually at the beginning of each financial year."
The GCCI president further said the Central government should have come out with a well-thought out and realistic formula to ensure an automatic increase in royalty rates once in every two years.
"In any case uncertainty and ad hocism in fixation of rate of royalty should go at the earliest, the matter should be regularised and past arrears should be paid to oil and gas producing states," Shah asserted.
