Gujarat protests oil royalty swindle

Vol 12, PW 20 (12 Mar 09) News in Brief

BJP lawmakers in Gujarat are accusing the Congress-led government in Delhi of cheating the state out of crude oil royalties.

Gujarat energy minister Saurabh Patel told the Gujarat state legislature on February 27 that Delhi had swindled the state out of $307m following a decision last April to link crude production royalty payments to the discounted rates paid by state-owned refiners instead of at wellhead rates. “Gujarat has only received $86m between April and December (2008) instead of $393m,â€‌ he said.

Patel adds that the change in royalty calculations introduced in April 2008 has hit Gujarat especially hard, because it produces more than 50% of the country’s crude. Others have a less sensational view.

“Lower revenue is because global crude oil prices have fallen sharply,â€‌ says Shaktisinh Gohil, leader of the state’s Congress Party opposition. “It is wrong to say that using well-head pricing to calculate royalty would bring in more revenue.