Petroleum minister Dharmendra Pradhan on Monday said his ministry will push for inclusion of all petroleum products under the ambit of Goods and Services Tax (GST). “Some states have concerns about losing on sales tax (revenue), but I think they will be the beneficiaries,” Pradhan said at the contract-signing ceremony of the awarded discovered small hydrocarbon fields (DSFs). He emphasised that the industry needs to create an environment to push towards GST.
At present, crude oil, natural gas, ATF, diesel and petrol are not in the purview of GST which seeks to have a one-nation-one-tax regime across the country. These items are, however, not constitutionally excluded from the GST which means that the GST Council can bring them at any time without an amendment to the Constitution.
Some of the other items outside the GST purview include alcohol for human consumption (which is excluded constitutionally), real estate and electricity.
Talking about the benefits of the DSF blocks, the Union minister expressed hope that these will play a vital role in increasing India’s hydrocarbon production and achieving the envisioned target to reduce energy imports by 10% by 2022.
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For the first round of DSF, the Directorate General of Hydrocarbons had received 134 e-bids for 34 contract areas comprising 46 fields. Contracts have been finally awarded for 31 contract areas to 22 companies of which 15 are new entrants to the hydrocarbon exploration and production sector.
The cumulation peak production from the awarded fields are expected to be around 15,000 barrels of oil per day and 2 mmscmd middle of gas over their economic life. The estimated total revenue from these fields is expected to be around R46,400 crore and the government is expecting a royalty of R7,100 crore for both the Centre and the states. The government’s revenue share from the fields is expected to be R9,300 crore.
Pradhan added that the government is also working towards launching the second round of DSF which will have more fields on offer apart from the current ones not bid under round 1. Simultaneously, the government is also planning to launch the National Data Repository, which will have information on all the hydrocarbon fields available in the country, which will herald the process of auctioning fields under HELP.
The last time new fields were awarded for exploration was in 2009 under the ninth round of NELP which was under product-sharing contracts. The HELP round, and even the DSF, will be under the more attractive revenue-sharing contract model.
The minister urged the new entrants along with others to go for enhanced oil recovery technologies from the beginning. “Though we have focus on conservation, it will need to be complemented with augmentation of production,” Pradhan added.
The minister also launched a portal created by DGH which will allow bidders to track the progress of their grievances.