Oil ministry wants banks to lend to E&P sector
Not just NITI Aayog, but the oil ministry is also doing all it can as part of government efforts to revive the Indian oil and gas sector.
On May 6 (2022), an oil ministry-nominated panel began discussions on establishing guidelines and frameworks for domestic banks to lend to development and production projects in the E&P sector. Well-placed sources said the first meeting took place in Mumbai at the office of merchant bank SBI Capital Markets under the chairmanship of Saiprasad Modi, the panel's convenor and VP of project advisory and structured finance at SBI Caps.
Among those who attended were panel members Rakesh Singh and Ranajit Bannerjee from HDFC Bank, Gulshan Malik from State Bank of India (SBI), Suniti Bhat of Antelopus Energy, Manish Maheshwari of Invenire Energy, and Kapil Garg of Oilmax Energy. Sources say this panel was set up on May 4 (2022) under an "order’ issued by the oil ministry under-secretary AK Mehta following directions by oil secretary Pankaj Jain.
"We have to work out a guiding framework," says a source who attended the May 6 meeting. "This will take some time, meetings will happen at regular intervals, and the concerns of both sides (lenders and E&P companies) have to be addressed."
Jain earlier attended a "round table’ meeting in Mumbai on April 29 between bankers and E&P companies after a roadshow to attract investors to the ongoing DSF-3 and special CBM Bid Round. During this meeting, E&P companies said they were unhappy that domestic private and state-owned banks are unwilling to lend to their development and production projects.
"Lending to such projects is common elsewhere globally," says a source. "The problem in India is that of the nearly 30 reserves’ consultants approved by the DGH, around 20 have no real credentials or expertise."
This, he explains, makes banks reluctant to trust their assessments. However, there is a simple solution: the banks should ask the E&P company to get its discovered reserves certified by one of the four or five globally established reserves consultants such as DeGolyer & MacNaughton, Gaffney, Cline & Associates or Netherland Sewell & Associates.
In its May 4 order, the oil ministry directed the panel to submit a report within ten weeks.