With finance minister Pranab Mukherjee restoring tax breaks for natural gas, the government will relaunch the nation’s largest-ever auction of oil and gas blocks, but the last date of bidding is likely to be extended. Promotional roadshows for 70 blocks offered for bidding under the eighth edition of New Exploration Licensing Policy (NELP) and 10 coal bed methane (CBM) areas were to begin on April 20, but the programme has been deferred due to ambiguity over availability of tax holidays for natural gas.
Petroleum secretary RS Pandey said a revised programme for domestic and overseas roadshows will be chalked out in consultation with oil minister Murli Deora in the next few days. Mukherjee had in his Budget speech stated that a seven-year holiday from payment of income tax on profits earned from production and sale of
natural gas would be available for blocks to be awarded
in Nelp-VIII.
Similar fiscal concession are already available for crude oil. “Now that a clarification has come and there is no ambiguity, the way has been cleared for the roadshows,” he said. Oil regulator DGH head VK Sibal, however, said there was a likelihood of extending the August-10 bid deadline, as more than three months had been lost. The government had launched Nelp-VIII and CBM-IV on April 9 and bids were to close on August 10.
Though the finance minister had restored tax breaks for natural gas to be produced from Nelp blocks, no such fiscal incentive has been announced for CBM blocks. Fearing investor backlash on ambiguity over tax holiday for natural gas, the government had on April 17 deferred the promotional roadshows.
The finance ministry, in the 2008-09 Budget, had scrapped the seven-year tax holiday or exemption from payment of income tax on natural gas production. The move drew flak from oil majors, who kept away from the previous Nelp-VII round that closed after the announcement.
The first roadshow for Nelp-VIII was to be held in Mumbai on April 20, followed by similar events in Perth (April 27-28), London (May 4-5), Washington (May 11-12) and
Calgary (May 14-15). India had offered 24 deep-sea blocks,
28 shallow water blocks and 18 onland blocks for bidding
in Nelp-VIII, hoping to attract $3 billion investment
in exploration.
India is aiming to cut oil imports and has till now awarded 203 blocks in the previous seven rounds with over $11
billion committed in exploration spend.
Besides, 23 blocks have been awarded in the
previous three CBM rounds. More than six trillion cubic feet reserves have already been established in four
CBM blocks.
Since its advent in 1999, NELP has given 68 oil and gas discoveries in Cambay onland, North East Coast and Krishna
Godavari deep-water areas, totalling over 600 million tonnes of reserves.
PTI
