Vedanta’s Barmer block: SC asks govt to consider lower revenue share | The Financial Express

Vedanta’s Barmer block: SC asks govt to consider lower revenue share

“The government of India (GoI) accorded its approval for extension of the PSC under the Pre-NELP Extension Policy, as per notification dated April 07, 2017, for RJ Block by a period of 10 years with effect from May 15, 2020 vide its letter dated October 26, 2018, subject to fulfilment of certain conditions,” Vedanta recently said in a regulatory filing.

Vedanta’s Barmer block: SC asks govt to consider lower revenue share
Vedanta — formerly Cairn India — had been engaged in a legal battle with the government for about five years over the terms of the extension of the 25-year contract that ran out in May 2020. (File)

The Supreme Court on Friday asked the Centre to reconsider its decision to raise its revenue share from Vedanta’s Barmer oil and gas block in Rajasthan by 10%, a move that could help the company raise the output from the once-prolific asset.

As the government recently extended the Vedanta’s production sharing contract (PSC) for its Rajasthan block for another 10 years till May 2030, it sought additional 10% profit from the oil block.

Vedanta — formerly Cairn India — had been engaged in a legal battle with the government for about five years over the terms of the extension of the 25-year contract that ran out in May 2020.

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Vedanta had told the apex court that it was ready to invest `15,000 crore to increase the production from the Barmer oil block, but said an additional 10% profit to the government would make the investments unviable. “The levy of additional 10% makes the project unviable,” it said.

“The government has increased its (profit) share which it can’t do as it will amount to altering the contract. We have been paying this 10% in protest since May 2018,” Vedanta’s senior counsel Arvind P Datar told a bench led by Justice Sanjay K Kaul. He added that 50% of the revenue goes towards royalty, VAT, etc.

Additional Solicitor General Sanjay Jain said the “endeavour (for the government) is to get maximum revenue share and profits”. He said it’s the policy decision and applies to all and not just Vedanta. “Relooking into this policy decision requires discussions at the highest level,” he added.  

The judges asked the Union ministry of petroleum & natural gas (MoPNG) to look into the “commercial aspect” and file an affidavit in this regard within four weeks. The top court also noted Vedanta’s arguments that if the production capacity is doubled, “it would generate more revenue and foreign exchange for it”. 

The SC posted the matter for direction on January 4.

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The Anil Agarwal-led Vedanta had moved the Supreme Court against the Delhi High Court’s March order that permitted the government to seek a higher share in the profit from the company’s Rajasthan field upon renewal of PSC. The HC had held that there cannot be an extension of the PSC unconditionally on the same terms and conditions which were prevailing 25 years ago, i.e. on May 15, 1995, the effective date.

“The government of India (GoI) accorded its approval for extension of the PSC under the Pre-NELP Extension Policy, as per notification dated April 07, 2017, for RJ Block by a period of 10 years with effect from May 15, 2020 vide its letter dated October 26, 2018, subject to fulfilment of certain conditions,” Vedanta recently said in a regulatory filing.

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First published on: 12-11-2022 at 12:05:00 am
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