NEW DELHI :  In a partial relief to Oil and Natural Gas Corp of India Ltd, the Supreme Court conditionally stayed the Gujarat High Court order, which held that the Maharatna company ought to pay to state government royalties on crude oil at pre-discounted rates and also asked the public sector undertaking to pay arrears of around 100 bln rupees royalty to the Gujarat government.

The apex court said the order on recovery of arrears pending since 2008 will not be received for now on the condition that ONGC pays royalty to the Gujarat government at pre-discounted rates, beginning Feb 1.

The court also issued notices to the central government and the Gujarat government seeking affidavits on their stand, and said it will expedite hearing on ONGC’s plea. The court said the petition will be heard in April. ONGC had moved the apex court challenging Gujarat High Court’s Nov 30

order that had asked the public sector company to pay around 100 bln rupees to the state towards the difference in royalty of crude oil it extracted since 2008.

The dispute pertains to royalty ONGC has to pay to the state government under the Oilfields (Regulation and Development) Act, 1948. As per the Act, ONGC was required to pay 20% royalty of the sale price of the crude oil it extracts from 66 oil blocks in Gujarat to the state government. However, in 2004, when the Centre asked ONGC to provide crude to Indian Oil Corp and other public sector companies at a discounted rate, it started paying royalty to Gujarat at the post-discount rate, resulting in a significant reduction in royalty to the state.   -Cogencis

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