TATA GROUP AGAINST PROFIT-SHARING IN COAL-TO-LIQUID PROJECT
NEW DELHI, Jan 05, 2009 (AsiaPulse via COMTEX News Network) -- India's Tata group and its
South African partner Sasol have opposed giving part of the
crude oil they plan to produce from coal (coal-to-liquid
project) to the Government as profit share.
Strategic Energy Technology Systems Ltd (SETSL), a joint
venture of Tata Sons and Sasol, vying for the coal-to-liquid
(CTL) project, has told the Government that profit-sharing
would effectively be a new tax, which is not permissible under
relevant Acts.
The Government is considering replicating the
production-sharing regime in oil and gas in the ambitious
project, which envisages producing crude oil up to 80,000
barrels per day (4 million tonnes a year).
Instead of charging upfront payment or signature bonus for
allocating natural resources, the Government gets a share of
oil and gas produced, called profit petroleum, which is
biddable and can be taken in kind or cash.
SETSL has, however, opposed the regime in the project saying
the Oilfield Regulation Act or the Petroleum and Natural Gas
Rules do not apply if crude oil and gas produced from coal are
synthetic and not naturally occurring hydrocarbon.
"Therefore, if a new tax in the form of profit-sharing on
CTL products is to be allowed, this can be done only through a
legislative measure with the approval of Parliament. This
cannot be done through an executive order," the company said.
SETSL's contention that the new regime cannot be introduced
after an invitation of bids was upheld by the Law Ministry,
which the Coal Ministry approached for an opinion on the
legality of the profit-sharing.
Sources said the Law Ministry has sought information from
the Coal Ministry whether the condition for profit-sharing from
the CTL project was incorporated after the expiry of the last
date for submitting applications.
(PTI)
(C) 2009 Asia Pulse Pte Ltd
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