Nagaland’s oil revenue crisis: MLA raises alarm over lost royalties amidst stalled exploration

Kohima, August 28: The stalled Memorandum of Understanding (MoU) with Assam, which aimed to establish a fifty-fifty royalty-sharing agreement for oil extraction in the Disputed Area Belt (DAB) between the states in 2023, appears to have significantly impacted Nagaland.

During the ongoing monsoon session of the Nagaland Legislative Assembly on Tuesday, National Congress Party (NCP) MLA Mhonbema Humtsoe raised concerns about the financial impact of stalled oil exploration activities.

Humtsoe pointed out that between 2018 and 2022, the Oil and Natural Gas Corporation (ONGC) extracted 657,432 metric tonnes of crude oil from eight fields within the DAB.

This extraction generated an estimated royalty of Rs. 3,399.79 crore, of which Assam received Rs. 553 crore. According to Humtsoe’s calculations, Nagaland could have received Rs. 276.50 crore under a fifty-fifty royalty-sharing agreement, but it didn’t.

In April 2023, both state governments had agreed in principle to resume oil and gas exploration and to sign a MoU for royalty sharing.

However, the Nagaland government’s stance changed in May 2023. Advisor Imkong L. Imchen had then stated that the MoU was only a “breakthrough” and “no formal proposal for royalty sharing had been made”.

Humtsoe further highlighted the historical context of oil exploration in Nagaland, citing the Changpang Oil Block in Wokha District.

Awarded to ONGC in 1973, the block produced approximately 1.036 million metric tonnes of crude oil between 1980 and 1994.

However, operations were halted in May 1994 due to pressure from student organisations and social groups.

The MLA argued that this cessation resulted in a significant revenue loss for Nagaland, with potential earnings running into thousands of crores if exploration had continued.

Referencing a report from the Ministry of Petroleum and Natural Gas’s Estimates Committee in 1998-99, Humtsoe noted that ONGC had paid Rs 33.29 crore in royalty to the Nagaland government during the active years of the Changpang Oil Block.

However, only Rs 67.57 lakh of this amount was distributed to landowners and affected villagers.

Humtsoe expressed regret over the lost opportunity and urged for renewed efforts to harness Nagaland’s natural resources. As he raised these issues in the Assembly, Humtsoe called for measures to achieve economic independence and better utilize Nagaland’s abundant natural resources.