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The Government’s revenue share from Cairn India operated Rajasthan oil fields will reduce by Rs 5,032 crore over the project life (2020), if royalty is made cost recoverable.
Cairn Energy’s proposal to sell 40 per cent of equity shares in Cairn India to Vedanta Resources was given conditional approval by the Government. According to the conditions the royalty paid by ONGC for the Rajasthan fields is cost recovery.
This information was given by the Minister of State in the Petroleum Ministry, Mr R. P.N. Singh, in Lok Sabha on Thursday.
On present assumptions of production, crude oil prices, and currency exchange rate, the Government’s share of profit will reduce by Rs 5,032 crore, that of Cairn by Rs 6,272 crore and ONGC by Rs 2,688 crore over the life of the project, the Minister said.
However, ONGC would recover the cost of royalty paid by it to the State Government on behalf of itself and Cairn amounting to Rs 13,995 crore over the life of the project. ONGC has to bear 100 per cent royalty as the licensee of the block.
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