Cairn-ONGC deal: Delhi HC gives Centre one last chance

The Delhi HC granted the Centre a 2-month extension to take a decision on the extension of a product-sharing contract between ONGC and Cairn India for the Barmer block in Rajasthan


State-owned ONGC and Cairn have been discussing the matter over the past few months and ONGC finally agreed to the extension of the contract on 14 July. Photo: Reuters
State-owned ONGC and Cairn have been discussing the matter over the past few months and ONGC finally agreed to the extension of the contract on 14 July. Photo: Reuters

New Delhi: The Delhi high court on Monday granted the Centre an extension of two months to take a decision on the extension of a product-sharing contract between Oil and Natural Gas Corporation Ltd (ONGC) and Cairn India for the Barmer block in Rajasthan.

Justice Sanjeev Sachdeva told the Centre to take this decision individually and not link it with the policy guidelines that the Centre was formulating keeping in mind other companies whose contracts are also set to expire.

“We would require more time to consider the technical and financial impact of the extension. Similar entities have also approached us with PSC extension and we will take a decision after considering everything.” said Kirtiman Singh, appearing for the Centre.

Also Read: ONGC, Cairn India face Rs730 crore service tax on royalty payments

The extension was opposed by Cairn which told the court that they had invested huge amounts.

“It cannot be a last-minute decision, we have invested billions and even the contact provides that extension of the PSC has to be sought well in advance. The Centre has constantly been asking for more time,” said C.A Sundaram, legal counsel for Cairn.

State-owned ONGC and Cairn have been discussing the matter over the past few months and ONGC finally agreed to the extension of the contract on 14 July.

In an order dated 14 December 2015, the court had laid down a timeline for a final decision on the extension of the contract between Cairn and ONGC beyond 2020.

As per the order, Cairn had got an extension of six weeks to furnish the information required by ONGC, which was to take a decision based on it within six weeks thereafter.

Also Read: Cairn India cannot export surplus crude from Barmer oilfields: Delhi HC

ONGC’s decision was then to be forwarded to the Centre, which was directed to take a final decision within three months from such communication.

The Centre has failed to take a decision till now and has sought extension from the court time and again.

The matter will be heard on 9 January 2017.

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