Lok Sabha Question No. 2878 (UNSTARRED), answered on 2017-03-20
Subject: Royalty Dues to States
Ministry: PETROLEUM AND NATURAL GAS
Asked by: BHEEMRAO BASWANTHRAO PATIL, DEVAJIBHAI GOVINDBHAI FATEPARA, SAUGATA ROY, MOHANBHAI KALYANJIBHAI KUNDARIYA

## LOK SABHA UNSTARRED QUESTION NO. 2878

## TO BE ANSWERED ON 20.03.2017 Royalty Dues to States

2878. SHRI BHEEMRAO B. PATIL:

SHRI DEVAJIBHAI G. FATEPARA:

PROF. SAUGATA ROY:

SHRI KUNDARIYA MOHAN BHAI KALYANJI BHAI:

पेट्रोल ियम एवं प्राक ृ तिक गैस मंत्री

## Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

- (a)  whether the Government has exempted Rs.22000 crores to state-owned oil producers Oil  and  Natural  Gas  Corporation  Limited  (ONGC)  and  Oil  India  Limited  (OIL)  from  the potential  liability  of  royalty  dues  to  States  like  Gujarat  and  Assam  and  if  so,  the  details thereof;
- (b)  whether  the  upstream  companies  including  Oil  and  Natural  Gas  Corporation  Limited (ONGC) are unilaterally paying the royalty to the States on post-discounted prices;
- (c)  if  so,  the  details  thereof  along  with  criteria  fixed  by  the  Government  for  payment  of royalty to the States on offshore and onshore oil and gas blocks, State/UT/company-wise;
- (d)  whether  the  Hon'ble  Supreme  Court  of  India  directed  ONGC  to  pay  royalty  on  prediscounted price of crude oil and if so, the details thereof along with any directive to ONGC for payment of huge amount of royalty to Gujarat;
- (e) the details of royalty paid by upstream companies to various State Governments during the last two years and the current year, company-wise; and
- (f) whether some State Governments have not received the royalty of crude oil and if so, the reasons therefor along with the steps taken by the Government in this regard?

पेट्रोल ियम एवं प्राक ृ तिक गैस मंत्रािय में राज्य मंत्री ( स्विंत्र प्रभार )( श्री धमेंद्र प्रधान )

## MINISTER OF STATE(INDEPNDENT CHARGE) IN THE MINISTRY OF PETROLEUM & NATURAL GAS (SHRI DHARMENDRA PRADHAN)

- (a)  to  (c)  :  In  order  to  protect  the  consumer  from  the  inflationary  impact  of  rising international  oil  prices,  the  Government  has  been  modulating  the  retail  selling  prices  of Petrol (upto 25th June 2010), Diesel (upto 18th October 2014), PDS Kerosene and Subsidized Domestic  LPG.  As  a  result,  the  Public  Sector  Oil  Marketing  Companies  (OMCs)  incurred under-recoveries  on  the  sale  of  these  petroleum  products.  In  this  background,  the Government has evolved a 'Burden Sharing Mechanism' since 2003-04 to ensure that the burden  of  under-recoveries  incurred  by  OMCs  is  shared  by  all  the  stakeholders  in  the following manner:
- i.  Government through issue of Oil  Bonds/Cash    Subsidy
- ii.  Domestic  upstream  oil  companies,  including  ONGC  and  OIL  through  price  discounts  to OMCs,
- iii. OMCs to bear a portion of the under recoveries.

It  was provided that the discount offered by upstream oil companies would not affect the royalty payable to the State Governments. Upstream oil companies paid the royalty on pre- discount price during the years 2003-04 to 2007-2008. However, in May, 2008, Government withdrew the said provisions. Accordingly, ONGC and OIL started making payment of royalty

to State Governments at post discount price for the period 01.04.2008 to 31.01.2014. (d):    Government  of  Gujarat  challenged  the  withdrawal  of  the  said  directives  regarding payment of  royalty  to  State  Governments  at  pre-discount  prices  before  the  Gujarat  High Court. Gujarat High Court inter alia pronounced that royalty on crude oil  is to be paid on pre-discounted price. Aggrieved by the order, ONGC filed a Special Leave Petition before the Supreme Court. Supreme Court stayed the operation of the impugned judgment subject to the condition that ONGC pays royalty to State of Gujarat on pre-discounted price of crude oil  w.e.f. 1 st February 2014 onwards. Subsequently Government of Assam also filed a writ petition  before  the  High  Court  of  Guwahati  and  further  moved  to  the  Supreme  Court. Recently all the stake holders reached an agreement and it was decided that an amount of Rs. 8392 crores and Rs. 6306 crores will be paid by the Government of India directly to the Governments of Gujarat and Assam respectively for the dues of royalty for the period from April,  2008  to  Jan,  2014.    Supreme  Court  has  disposed  the  both  petitions  as  per  above agreement. (e): The details of royalty paid by ONGC/OIL to various State Governments during the last two years and current years are at Annexure. (f) Government has decided to pay the outstanding amount of royalty to all similarly placed State  Governments  i.e.  Arunachal  Pradesh,  Andhra  Pradesh,  Assam,  Gujarat  and  Tamil

Nadu.

Annexure-I

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| Royalty Paid by ONGC to various State Governments   | Royalty Paid by ONGC to various State Governments   | (Rs. in Crore)   | (Rs. in Crore)                |
|-----------------------------------------------------|-----------------------------------------------------|------------------|-------------------------------|
|                                                     | 2014-15                                             | 2015-16          | 2016-17 (Upto December, 2016) |
| Assam                                               | 1267.72                                             | 1257.92          | 931.82                        |
| Arunachal Pradesh (AP)                              | 2.33                                                | 1.86             | 1.97                          |
| Rajasthan                                           | 8.08                                                | 8.50             | 5.11                          |