Consider Lowering Profit Share, Supreme Court Tells Government


The Supreme Court has asked the central government to consider bringing down its share of profit in the Rajasthan oil block, which is operated by billionaire Anil Agarwal’s Vedanta Ltd.

This happened after the energy giant submitted before the apex court that it is willing to double production in the block if the government is willing to reduce its share of profit.

Increased production will not only increase the government’s revenue, but will also save foreign exchange, the energy giant argued.

“There is a commercial aspect to this case…. we call upon the Ministry of Petroleum and Natural Gas to look into it,” said a bench comprising Justices Sanjay Kaul and Abhay Oka, on Friday.

The ministry has been given six weeks to decide on the issue.

The case pertains to the 25-year Production Sharing Contract that the government had signed with Cairn India back in 1995, to operate the Rajasthan oil block situated in Barmer. Vedanta acquired majority stake in Cairn India in 2011, and became the operator of the oil block.

In 2018, the government had raised its share in the profit of the company, which it has been paying “under protest”.

The government raised its share under a policy that said that for companies operating oil and gas fields, extension beyond the initial 25-year contract period can happen only if the company agrees to increase the government’s share of profit by 10%.

The contract was extended for Vedanta last month for a further 10 years, till 2030.

Vedanta had challenged the policy last year. Despite the government and the company agreeing to extend the contract, it still wants to pursue the legal challenge to the policy, Vedanta told the apex court.

It argued that the government cannot change the terms of the contract through a policy decision.

The government responded by saying that the decision to hike profit share was taken for the first time since 1995, in 2018, and has been taken vis-à-vis all oil and gas explorers.

Justice Kaul said that he expects a solution will be found before the next hearing, and if not, the apex court can delve into the merits of the case.

The matter will come up for hearing next on Jan. 4.


Source link

What is your reaction?

In Love
Not Sure

You may also like

Comments are closed.

More in:Business