Operators of some 28 fields in Gujarat, Assam and Arunachal Pradesh pay royalty on crude oil they produce at the cap rate mentioned in Production Sharing Contract (PSC) dating back to 1990s. These rates were capped at Rs 450 per tonne as against the current rate of 12.5 percent of the price of oil.
    
To protect state revenues, the difference between the two was made good by the Oil Industry Development Board (OIDB) funds. The Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, today agreed the proposal to pay the differential royalty from the budgetary allocation for 2015-16.
    
The outgo on this account in the current fiscal would be Rs 56 crore, an official statement said. CCEA "approved the proposal for payment of differential royalty -- the difference between the rates of royalty as per
provisions contained in respective PSCs and the notified rate of royalty on crude oil production -- to concerned state governments in respect of 28 discovered fields, which were awarded by the government to different companies during the years 1994-95, 2001 and 2004," it said.
    
States to benefit will be Arunachal Pradesh, Assam and Gujarat. "The payment shall be through budgetary allocation instead of through Oil Industry Development Board (OIDB) fund from the year 2015-16 onwards," it said.
    
Acceptance of the proposal would mean that while the outflow from OIDB will be reduced accordingly, government outgo from the Budget would be Rs 56 crore in the current fiscal.

 

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