SC disposes royalty payment case between ONGC, Oil India and Assam govt

As per a pact reached between the petroleum ministry, the Assam government and ONGC, the Centre would pay royalty to the state government


The court’s decision comes just a day after a similar case was dropped on the same settlement terms between the Centre, ONGC and Gujarat government. Photo: Mint
The court’s decision comes just a day after a similar case was dropped on the same settlement terms between the Centre, ONGC and Gujarat government. Photo: Mint

New Delhi: The Supreme Court on Tuesday disposed of a case relating to royalty payment of Rs6,323 crore for onshore drilling by Oil and Natural Gas Corp. Ltd (ONGC), Oil India Ltd and the Assam government as the parties reached a settlement.

The Centre informed the court that as per an agreement reached between the ministry of petroleum and natural gas, the Assam government and ONGC, the Centre would pay the state government.

The court’s decision comes just a day after a similar case was dropped on the same settlement terms between the Centre, ONGC and Gujarat government.

ONGC and Oil India owed Assam Rs1,350 crore and Rs4,973 crore, respectively, which will now be paid in three installments between 2016-2019.

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Assam had filed a writ petition before the Gauhati high court seeking ONGC and Oil India to pay royalty on the gross bill price of crude oil. The companies, as per a government of India directive, pay royalty on the net or actual price realized from refiners after allowing for fuel subsidy discounts. In October 2015, the government fully deregularized diesel prices.

Last year, the oil companies made a partial payment of Rs1,450 crore to the Assam government as royalty dues on crude oil mined in the state. Both Assam and Gujarat had claimed that the royalty computed on the basis of the pre-discount price had impacted revenues.

ONGC director (finance) A.K.Srinivasan had told Mint on 20 February that a memorandum of understanding has been reached towards resolving the royalty issue.

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