The government may provide a 10-year extension to Vedanta Group firm Cairn India for its oil exploration contract in Rajasthan that is set to expire in 2020, if the company agrees to increase the Centre’s royalty.

“Cairn has a production sharing contract which expires in 2020. The government has offered an extension of the production sharing contract to Cairn for 10 years on the condition that they increase their share of revenue to the Government of India,” Rajasthan Chief Secretary CS Rajan told reporters on Friday.

At present, the government's profit from petroleum ranges from 25 to 60 per cent and for Cairn’s Rajasthan block, it is 50 per cent.

Speaking on the sidelines of the Resurgent Rajasthan Partnership Summit, he said this time round, the risk factor had declined as oil reserves have already been located.

“With lower risk investment this time round, they should be willing to part with the higher share of profit to the government of India,” he said. 

Cairn owns a 70 per cent stake in the Barmer oil block and is hoping to extend the contract beyond 2020.

The block, which is co-owned by Oil and Natural Gas Corporation, is responsible for one-fourth of the country’s oil production.

UDAY scheme

With its state electricity board saddled with over ₹85,000 crore in debt, the Rajasthan government is ready for UDAY or the financial turnaround scheme for State utilities that was approved by the State Cabinet recently.

 “We have factored in to take about 50 per cent of the debt by March 2016 and the remaining by the first quarter of 2016-17,” Rajan said, adding that it will also help reduce the interest cost.

 The State is expected to start its implementation as soon as the Cabinet decision is notified, he added.

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