Gujarat richer by Rs8400cr in E&P royalty

Vol 21, PW 1 (05 Oct 17) News in Brief
     

First it was the promise of a bullet train connecting Mumbai to Ahmedabad, now it is outstanding payments from ONGC that have, as if by magic, appeared from nowhere.

With less than two months before Gujarat state elections in December, Narendra Modi is going out of his way to woo voters in his home state. In the third week of September, the state government ended its dispute with ONGC over royalty payments and received the final Rs7134cr ($1.07bn) installment of a Rs8392cr ($1.26bn) bill owed between April 1, 2008 and January 2014.

This follows payment of an initial 15% or Rs1258cr ($189m) by March 31, 2017. ONGC was in dispute with the Gujarat state government after it changed the formula to calculate royalties on crude oil production.

ONGC wanted to pay only on the discounted price of oil it charges to refineries but in the end was forced to pay it on the market price. "Modi is the shrewdest politician," admits a source in the opposition Congress party.

"His timing is amazing. The royalty payment is a huge windfall for Gandhinagar."

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