Vedanta says will double Barmer production if India withdraws additional 10% levy on revenue

The Supreme Court on Friday directed the Central government to reconsider the additional 10 percent levy it had imposed on the revenue from Vedanta’s production at its oil fields in Rajasthan’s Barmer. Vedanta has proposed to the Supreme Court that it would double the production from the Barmer oil fields if the Central government withdraws the policy decision of the additional 10 percent duty.

The Centre told the Supreme Court that the additional levy had been increased uniformly for all players, not just for Vedanta and that a 10 percent increase after a 25-year-period was not unreasonable. "The endeavour is to get the maximum share of profits," it said.

In March last year, the Delhi High Court had said that the Central government could demand a 10 percent higher share in the profit derived from oil produced by Vedanta from the Barmer oil field in Rajasthan to extend the production-sharing contract with the company for another 10 years. Vedanta later challenged the order in the Supreme court in September 2021.

Vedanta argues that the production-sharing contract provided that if gas was recovered from Barmer, it would automatically be eligible for a 10-year extension. It argued that there is no room in the production-sharing contract for an increase in payment to the government while it is already paying 50 percent of revenues as royalties and taxes.

Vedanta added that the production capacity at Barmer can be doubled by further investments, which will generate more revenue and forex for the Centre. However, it is not being done as the Centre is seeking an additional 10 percent share of the revenue.

The top court has given the government six weeks to take a decision on whether it wants to continue with the additional 10 percent levy policy or not.

In August, too, the Supreme Court had sought the Centre's response to Vedanta Ltd's appeal against a Delhi High Court verdict relating to Vedanta and Oil and Natural Gas Corporation's (ONGC) production-sharing contract for the Barmer field in Rajasthan.

Vedanta had filed an appeal with the Supreme Court, on March 26, against an order by a division bench of the Delhi High Court extending the PSC between Vedanta and ONGC to 2030.