ONGC seeks $4 bn reimbursement

ONGC has asked the government to reimburse $4 bn in royalty and cess payments.

Oil and Natural Gas Corp has asked the government to reimburse USD 4 billion in royalty and cess payments it pays on behalf of partners like Cairn or else allowed to exit from the fields like Mangala in Rajasthan.

ONGC executives yesterday met finance ministry officials to press for reimbursement of royalty and cess the firm has to pay in excess of its shareholding in blocks like RJ-ON-90/1 in Rajasthan.

“They have asked for some more information,which we will provide to them by next week,” a source in know said.

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The government had in 1990s promised to take care of statutory levies on oil and gas production if foreign firms were to invest in India. ONGC made the licensee and given an option of taking 30 per cent interest in the blocks but irrespective of the stake it was made liable to pay royalty and cess on entire production.

“For ONGC,this is a loss making proposition. ONGC will lose Rs 14,000 crore in Rajasthan block alone and there are other blocks,” the source said.

ONGC has said that if the statutory levies are not reimbursed then it should be allowed to exit the blocks at cost and upstream regulator DGH be made the licensee.

“There is a feeling that ONGC makes money on these blocks and so it has said that it be relieved and all its past cost reimbursed in actuals and let DGH be made licensee,” he said.