Resurgent Modi bullies Naik for more oil tax revenue

Vol 6, PW 23 (29 Jan 03) People & Policy

HIS NAME IS dirt outside the borders of his state, but Narendra Modi, the re-elected BJP chief minister of Gujarat, is clearly a popular man at home.

His landslide victory in December's state election has given this distasteful politician a level of confidence not seen before in his dealings with the oil ministry. On 10th January Modi held a meeting with oil minister Ram Naik in Delhi.

His message was clear: Gujarat wants a bigger cut of money earned from oil and gas exploration on its territory: more cess (tax), more royalty, more profit petroleum. Days earlier Modi sent Naik two letters clearly setting the tone for the meeting.

Top of his list was a demand for half the Rs1,800 rupees tax (cess) collected from ONGC on the production of a tonne of crude. "Since state governments have more of a role to play in the liberalised regime, it would be logical that the government of India share the revenue with the states where crude is produced." writes Modi.

"I would like to suggest that 50% of the income generated in the state on account of cess should be given to the state government." Modi is equally robust in repeating his demand for more royalty. "This matter has become a sensitive one, and there is a feeling that the state has not yet got its rightful dues for the oil produced in the state," adds Modi.

"We are extremely anxious to ensure that a final view is taken on the dues relating to royalty. We would like to reiterate our stand that the price of indigenous crude oil has to be priced on the principles of import parity." Modi also criticises Naik for "putting on the back burner" a commitment by Delhi to split profit petroleum equally with state governments from NELP blocks.