Delhi HC: Govt can ask Vedanta for 10% higher profit from Barmer block to extend PSC

• The High Court also said that Vedanta does not have the right to demand extension of the PSC on unilateral terms that suit its interest

• No embargo can be placed on the right of the government to extend the contracts on terms that are different from the initial terms of the PSC, said the court

New Delhi: The government can demand 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 (PSC) with the company for another 10 years, the Delhi High Court (HC) has said in its verdict. The HC bench, which comprised Chief Justice DN Patel and Justice Jyoti Singh, said on March 26 that no embargo can be placed on the right of the government to extend the contracts on terms that are different from the initial terms of the PSC, "so long as they are in public interest and subserve the purpose of maximising revenue generation."

Vedanta doesn't have right to demand PSC extension on unilateral terms: HC

The High Court also said that Vedanta does not have the right to demand extension of the PSC on unilateral terms that suit its interest, while overlooking the interest of the State, which functions as a trustee of the natural resources under a Constitutional mandate. "For all the aforesaid reasons, we hold that there cannot be extension of the PSC unconditionally, on the same terms and conditions which were prevailing 25 years ago i.e. on May 15, 1995, the effective date," said the High Court.

The backdrop

The ruling sets aside the single judge verdict of May 31, 2018. In the verdict, the judge had directed the government to extend the terms of the contract for a period of 10 years, until 2030, on the same terms and conditions as the ones delineated in the PSC which was signed on May 15, 1995. Along with Vedanta, state-run Oil & Natural Gas Corporation (ONGC) is also a party to the PSC with the government under which the two companies are mandated to extract oil from the Barmer block in Rajasthan.

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Vedanta had moved the court after its request to the government in 2009 to extend the PSC on the same terms did not receive any response. It contended that the delay in the decision-making by the government was preventing it from putting in additional investment of Rs 30,000 crore into the project.

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