Gujarat uses earthquake to back royalty demand

Vol 5, PW 11 (18 Jul 01) People & Policy

Keshubhai Patel, chief minister of Gujarat, is using the state's unfortunate record of natural calamities as justification for his increasingly vocal demand for a sharp hike in the royalty paid to the state exchequer on a barrel of locally produced crude.

"As you know Gujarat has suffered two years of successive droughts, accompanied by asevere earthquake disaster, which has put a heavy burden on the state's resources," writes Patel in a letter to oil minister Ram Naik. "If we do not even receive our legitimate dues of royalty on crude oil, how can we meet the huge financial gap of meeting with the natural calamities and maintain the tempo of development" In a detailed four-page letter dated 26th June Patel condemns the oil ministry for not implementing its pledge to replace the "controlled" royalty rate of Rs800 ($17) on a tonne of ONGC crude - sold to refiners for a fixed price of Rs5,570 ($118) per tonne or approximately $15 a barrel - with a royalty rate more in line with the international price.

"I would like to register our strong protest," adds Patel, "against linkage of royalty rates on crude to such an artificial transfer price of crude oil to the refineries in total disregard to the declared policy of the government of India to price indigenous crude oil on international parity."

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