Government to appeal Delhi High Court order extending Vedanta's Rajasthan contract: Oil minister
NEW DELHI: The Government will appeal Delhi High Court order to extend the contract for Vedanta’s prolific Rajasthan oil and gas block without altering the terms of the original agreement, Oil Minister Dharmendra Pradhan has said.
Delhi High court on May 31 had ordered the Government to extend the term of Vedanta’s contract by another ten years on the same terms and conditions as prescribed in the original 25-year contract that expires in 2020. Vedanta and the government has been quarrelling in the court for more than two years over the terms that would apply during the extended period.
While the Court was hearing Vedanta’s plea for extension, the government prepared a new policy last year that, most importantly, required operators such as Vedanta to give away ten percent more in profit petroleum to the government during the extended period. The argument was that companies face less risk in the extended period and therefore should take home lower reward.
“The Government has the authority to frame policy. We will stick to that policy framework and the Government will go for appeal,” Pradhan told a news conference organised to showcase his ministries’ achievement in four years.
The court has rejected the government’s plea of applying the new policy to Vedanta’s Rajasthan block. “The new policy cannot be used to repudiate the plain terms of the contract to the detriment of the petitioners. The execution of the production sharing contract occurred prior to formulation of the new policy. The new policy was firmed up and notified during the pendency of the writ petition. The new policy, therefore, cannot govern the terms of the production sharing contract,” the order said.
State-run Oil and Natural Gas Corp (ONGC), as the government nominee, also has 30% participating interest in the Rajasthan block.
Delhi High court on May 31 had ordered the Government to extend the term of Vedanta’s contract by another ten years on the same terms and conditions as prescribed in the original 25-year contract that expires in 2020. Vedanta and the government has been quarrelling in the court for more than two years over the terms that would apply during the extended period.
While the Court was hearing Vedanta’s plea for extension, the government prepared a new policy last year that, most importantly, required operators such as Vedanta to give away ten percent more in profit petroleum to the government during the extended period. The argument was that companies face less risk in the extended period and therefore should take home lower reward.
“The Government has the authority to frame policy. We will stick to that policy framework and the Government will go for appeal,” Pradhan told a news conference organised to showcase his ministries’ achievement in four years.
The court has rejected the government’s plea of applying the new policy to Vedanta’s Rajasthan block. “The new policy cannot be used to repudiate the plain terms of the contract to the detriment of the petitioners. The execution of the production sharing contract occurred prior to formulation of the new policy. The new policy was firmed up and notified during the pendency of the writ petition. The new policy, therefore, cannot govern the terms of the production sharing contract,” the order said.
State-run Oil and Natural Gas Corp (ONGC), as the government nominee, also has 30% participating interest in the Rajasthan block.
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