Centre can't stop us from exporting crude: Cairn India to HC

New Delhi: Cairn India Tuesday claimed in the Delhi High Court that under Foreign Trade Policy, the Centre cannot stop it from exporting crude from its Rajasthan oil field.

The firm told a bench of Justice Manmohan that as per the policy, Cairn can export crude oil and it does not require any no objection certificate (NOC) from the Ministry of Petroleum and Natural Gas.

Cairn, a subsidiary of UK-based Vedanta group, submitted that it had made several representations to the Directorate General of Foreign Trade (DGFT) for permission to export the crude, but did not get any response.

It also claimed that prior to approaching DGFT, it had written to the Indian Oil Corporation Ltd (IOCL) to "canalise" export of the crude, but got no response from the PSU. IOCL is the canalising 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.

The counsel representing Cairn India submitted that they were selling the crude at a lower price and the government was "discriminatory" towards them as the policy has permitted Indian Oil to export.

The firm was responding to the Centre's contention that it cannot be allowed to export excess crude from its Rajasthan oil field as it is a policy to ensure that there can be no export till domestic demand is met.

The ministry, however, had said that Cairn was permitted to sell crude to domestic companies within India but they cannot be allowed to export it.

The court was hearing Cairn India's plea seeking directions to the government to permit it to export the excess crude. 

Cairn had earlier told the court that a loss of Rs 1,400

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 percent less than global rates.

The contention was opposed by the Ministry of Petroleum and Natural Gas which had told the court that the loss to government as calculated by Cairn India 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 percent of crude produced from the well and rest goes to the 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 had claimed.

However, after the crude is sold, government gets 70 percent of the profits, it had told the court.

It had claimed that as a result of selling 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.