Getting ready to sign a PSC for Ratna oilfield at last

Vol 9, PW 9 (11 Aug 05) People & Policy
     

Hopefully this isnt another false alarm.

But we hear that after nearly a decade a date is finally in sight for the signing of a PSC between the government and a consortium of Premier Oil (10%), Essar Oil (50%) and ONGC (40%) for the Ratna & R Series fields. All hurdles have been cleared, bar one: approval of the department of revenue to exempt the consortium from present cess and royalty rates, a longstanding consortium demand.

In the last week of July the oil ministry wrote to the finance ministrys department of revenue that the Ratna consortium should be charged cess and royalty at rates when the block was awarded in 1996 and not the current (much higher) rates demanded by the Negotiating Team of Secretaries on 22nd April. Once the revenue department agrees the oil ministry will set a date to sign the PSC, says a source.

Will the revenue department agree They must agree. They have agreed to exemptions in the past.

We dont see why they should disagree here. Must the file return to the Negotiating Team of Secretaries The oil ministry thinks not.

We dont see any need to return it to the NTS. Hopes for the Ratna PSC follows a legal opinion received by the ministry in mid-July from Milon Banerji, Attorney General of India.

Banerji, the governments chief legal adviser, overturned an earlier legal opinion from the Solicitor General of India, Goolam Vahanvaty, by saying the terms in the draft Ratna PSC should be left unchanged. Banerji said the terms of the PSC once negotiated and agreed between the parties should not be changed, adds a source.

But Vahanvaty said that since the parties are still negotiating on the basis of a model contract the government could renegotiate the terms in the public interest. Luckily for the Ratna consortium, Banerjis words count for more.

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