The Petroleum Ministry has asked Cairn India to pay a production tax on the oil it has started to produce from its prolific Rajasthan fields even though the contract does not clearly lay the onus of the levy on it. Cairn will have to pay the Rs-2,500 per ton oil cess in proportion to its 70 per cent interest in the Rajasthan fields while state-run Oil and Natural Gas Corp (ONGC) will pay for its 30 per cent stake, Oil Secretary R S Pandey said on Friday.
The government had in all pre-NELP blocks like Rajasthan that were awarded to foreign firms, clearly stated that the contractor will not bear any cess and royalty on oil and gas. This liability was vested on licensee, which in the Rajasthan block case is Oil and Natural Gas Corp (ONGC). The PSC for Rajasthan block clearly makes ONGC liable to pay royalty but there is no specific mention of OIDA cess.
The government had in all pre-NELP blocks like Rajasthan that were awarded to foreign firms, clearly stated that the contractor will not bear any cess and royalty on oil and gas. This liability was vested on licensee, which in the Rajasthan block case is Oil and Natural Gas Corp (ONGC). The PSC for Rajasthan block clearly makes ONGC liable to pay royalty but there is no specific mention of OIDA cess.
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