Shares of metal major Vedanta rallied as much as 4% to their day’s high of Rs 310 on the BSE on Tuesday after the Centre reduced royalty rates on the production of crude oil and natural gas from several categories of fields, including deepwater and ultra-deepwater blocks, in a move aimed at boosting domestic exploration and production. The revised rates were notified by the Ministry of Petroleum and Natural Gas on May 8.
But why is Anil Agarwal’s Vedanta a beneficiary? Hong Kong brokerage CLSA said the government has fixed the standard deduction at 15% for all blocks other than nomination blocks. According to the brokerage, this will reduce royalty rates for Vedanta’s Rajasthan fields from 16.67% to 10.6%.
