Search the Internet          Tips  Sites: Finance, Investment

Centre to share petro profits with states

Petroleum ministry has proposed to part with profits it gets from oil properties awarded to various companies as part of efforts to give additional revenue to states.

Ministry of petroleum & natural gas has moved a Cabinet note for equally sharing its profits from oil companies with the states where oil and gas exploration is being done, official sources said.

"Profit Petroleum, hereto exclusively Centre's right over a percentage of profits accrued from oil and gas exploration, would be shared between the Union Government and the respective states in 50:50 ratio," they said.

States like Gujarat and Assam, which are centre for oil and gas production, would benefit most from the decision, sources said, adding "this is an incentive we are planning to give to states to expedite clearances from their end for beginning oil and gas exploration."

Profit Petroleum, a biddable amount, is the percentage Centre gets from the profits accrued by oil companies after the E&P (exploration and production) company is able to recover its investment.

Meanwhile, the finance ministry is believed to have objected to the move saying the issue should be referred to the Finance Commission, which looks into sharing of taxes between the Centre and the states.

Petroleum ministry, on the other hand, has contended that Profit Petroleum is not a tax revenue but a dividend for which referral to Finance Commission was not necessary, sources said adding "the ministry has circulated a re-drafted Cabinet note giving the above reasons."

ALSO READ:
More Money Headlines