Anil Agarwal-controlled Vedanta Ltd on Monday informed stock exchanges that it had got a 10-year extension from the Indian government for Cairn’s oil & gas-operated RJ-ON-90/1 block in Rajasthan's Barmer district.
“The Government of India, acting through the Directorate General of Hydrocarbons, Ministry of Petroleum and Natural Gas has granted its approval for a ten-year extension of the PSC (production-sharing contract) for the Rajasthan Block, RJ-ON-90/1 (the ‘RJ Block’),” Vedanta said in its statement to the BSE.
The tenure of the RJ Block PSC, which was due to expire on May 14, 2020, has been extended for an additional period of 10 years with effect from May 15, 2020. The extension was granted under the government’s policy dated April 7, 2017, for extension of Pre-New Exploration Licensing Policy (Pre-Nelp) exploration blocks’ PSCs, subject to certain conditions. The applicability of the Pre-Nelp extension policy to the RJ Block PSC is currently sub judice.
In March 2017, the government had come out with a policy on PSC extension which said a company would get an extension beyond the initial 25 years only if the government's profit share was increased by 10 per cent. Later, this went into a legal battle at the Delhi High Court, on which a single Bench in June ruled in favour of Vedanta, directing the Centre to extend the PSC till 2030 to produce oil from the Rajasthan block. This was put on hold by the Division Bench.
Later, both the company and the government agreed to increase the latter’s share of profit by 10 per cent, until the ongoing legal battle got over.