Assam wants backdated royalty from Oil India

Vol 6, PW 21 (18 Dec 02) News in Brief

Assam authorities are accusing Oil India of avoiding payment of oil and gas royalty worth at least Rs10cr since 1998.

Assam's Commissioner of Taxes and the state's Bureau of Investigation (Economic Offences) have written to Oil India demanding payment. According to oil ministry rules, royalty is 10% of the sale price at wellhead.

ONGC uses this formula but Oil India calculates royalty on the basis of (the lower) cost price of gas at wellhead, not on the sale price. With new royalty rates, Assam reckons the loss adds up to Rs25cr.

Assam is also angry that Oil India isn't paying 12% sales tax. "We are examining the letters and will respond suitably," an Oil India spokesman tells us.

"We can't understand why they waited so long before raising the issue."