Rangarajan plan for profit sharing ready for Cabinet
The minister wants to get the changes adopted at the earliest and is in the process of proposing these to the Cabinet for approval. “I want to ensure that like in China, we have big investments and new production of gas and oil flowing in five to six years. We can do it,” Moily told FE. “I want to quickly move to a transparent exploration process for future projects after 2014 based on a simple revenue-share formula suggested by the recent Rangarajan committee on the production-sharing contract mechanism in the petroleum industry,” Moily said.
Industry executives said they are not against the move as any prospective change in auctioning blocks will be taken into account while deciding how aggressively to bid.
The new formula enables the government to get a predetermined share of revenue from oil or gas production contracts without regard to whether the producer company has recovered its costs.
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