The Indian government has stated that it is going to de-link the issue of cess on the crude oil from the other approvals that are required by the Cairn India in order to lay a pipeline. The pipeline is being laid for transporting the produce from Rajasthan to the delivery point in Gujarat. The officials of the government have informed that the government decided to do so for avoiding further delays in the development work that is connected with this oil field. According to one of the senior officials from the Petroleum Ministry, the government took the decision for dealing with the cess issue separately and not to delay the other development work.
The sources from the industry have stated that the government impose the cess for funding the oil industry development and there is a disagreement between the licensee of the field, ONGC and the joint venture partner Cairn on who would pay the cess. The sources also informed that the Petroleum Ministry has been maintaining that the consortium partners of Rajasthan oil fields like the Cairn and ONGC, would have to share the amount of cess. They said that the Cairn is operating the block with a 70 per cent stake and the ONGC is holding the rest of the 30 per cent interest in the block.
The governments demand for cess under the Oil Industry Development Act (OIDA), was being disputed by the Cairn for long and the Empowered Committee of Secretaries did opine that the issue of cess could be considered, only after the production starts. The sources said that Cairn is planning to start producing oil from Rajasthan in the second half of the year of 2009. The sources added that the government usually calculate the cess amount at about Rs 2,500 per tonne of oil at the current rate. However, if the government takes the earlier rate, then it is going to be somewhere around Rs 900 per tonne. The sources further said that the Cairn and ONGC will lay a 585-km pipeline to the new sale point and also include the pipeline cost in the field development plan. The plan is recoverable from the sale of oil.
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| Posted : 3/25/2008 |
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