The proposal will have a financial implication on government budgetary allocation, while the outflow from OIDB will be reduced accordingly. The expected expenditure for the year 2015-16 has been estimated at Rs.56 crore comprising of Rs.30 crore for Arunachal Pradesh and Rs. 26 crore for Gujarat (assuming average crude oil price of US$ 50/barrel and one US$ being equivalent to Rs.60).
Currently, State Governments are getting royalty based on the Oilfields (Regulation & Development) Act, 1948 and Petroleum & Natural Gas Rules, 1959 and the differential R oyalty (difference between the Royalty rates as per PSC and the notified rate of Royalty on crude oil production) is being paid by OIDB. The Standing Committee on Petroleum & Natural Gas, while examining the functioning of OIDB, recommended that differential Royalty to the State Government concerned may be made through budgetary allocation, in order to ensure proper utilization of OIDB fund.