Cairn Can’t Export Excess Crude: Government to High Court


New Delhi: The government on Thursday told the Delhi High Court that its empowered committee of secretaries has decided that Cairn India cannot be allowed to export the excess crude from its Rajasthan oil field.

The submission was made before Justice Manmohan by the Ministry of Petroleum and Natural Gas which was directed on January 19 to place the issue before the committee and come back with a decision.

Additional Solicitor General Tushar Mehta and central government Standing Counsel Anurag Ahluwalia told the court that the committee met on January 21 and decided that Cairn cannot be allowed to export the excess crude.

The lawyers said that an affidavit to this effect would be filed before the next date of hearing on February 18.

The court was hearing the plea of Cairn India, subsidiary of UK-based Vedanta group, seeking directions to the government to permit it to export the excess crude.

It had earlier told the court that a loss of Rs 1400 crore has been caused to government as the company was forced to sell its share of crude from its Rajasthan oil field to private players at prices 20 per cent less than global rates.

The contention was opposed by the ministry which had told the court that the loss to government as calculated by Cairn was “notional” and the company was incurring no loss either, as it was selling the crude not picked up by PSUs or the government to private domestic players.

Cairn had said that as per the production sharing contract (PSC) it has with the government, it gets 70 per cent of crude produced from the well and rest goes to government.

Under the PSC, the government or its nominee can pick up the company’s share of crude and what is not picked up, could be sold to private players or exported, Cairn said. However, after the crude is sold, government gets 70 per cent of the profits, it told the court.

It claimed that as a result of selling the excess crude to private domestic companies like Reliance and Essar, at rates lower than international prices, government was losing about Rs 4.5 crore per day.

Cairn had said it had made several representations to Directorate General of Foreign Trade (DGFT) for permission to export the crude, but did not get any response. Prior to this, it had written to the IOCL to “canalise” export of the crude, but got no response from it as well. IOCL is the canalizing agent for export of crude.

Canalising agents are those through which a product can be imported or exported by companies which do not have permission to do so directly.