DGH drafts new policy on exploitation of shale gas
The draft policy, submitted to the ministry last month, does not permit cost recovery and hence profit sharing — the two features that came under criticism by the CAG in its audit report. Instead, it banks on production-linked payment (PLP) as the Centre’s share from the discovery.
“PLP would be a fixed percentage of revenue receipts from the shale gas or shale oil sold from the contract area, net of royalty on a monthly basis,” the revised draft says. Royalty would be in line with what has been prescribed in the Oilfields (Regulation & Development) act, it adds.
The PLP quoted at the time of the bidding for blocks assumes significance as it would carry the maximum 60 per cent weight for deciding the award of the block. The total investment quoted for completing the promised minimum work programme would get 40 per cent weightage.
As a fiscal incentive, the contractor will be exempt from PLP payment for the first five years from the start of commercial production or from the date of entering the development and production phase, whichever is earlier.
“It implies that the maximum period of PLP exemption would be 10 years from
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