Cabinet rejects proposal to share 'Profit Petroleum'

Vol 6, PW 13 (28 Aug 02) People & Policy

POOR RAM NAIK, under attack from all sides! Not only is he under scrutiny for his role in the retail fuel station scam, we now learn his cabinet colleagues have accused him of being "too soft" in negotiations with oil-producing states Gujarat and Assam! In late July, before scandal hit the headlines, Naik was forced to withdraw an oil ministry "note" to the cabinet recommending that Profit Petroleum earned from NELP acreage be split 50-50 between Delhi and the states.

Several of his senior cabinet colleagues spoke out vehemently against the proposal and told him he was "pampering the states too much." Naik, we learn, was taken aback at this opposition and withdrew the proposal. Gujarat and Assam, India's main oil producing states, will lose the most as a result.

Along with Madhya Pradesh, Gujarat and Assam have been demanding a share ofProfit Petroleum ever since NELP was first announced in 1997. "We felt the only way to resolve this was to share profit petroleum with them," reveals a ministry source.

"We need their cooperation to accelerate exploration." Sadly, that cooperation may no longer be so forthcoming. Profit Petroleum from NELP acreage is unlikely to flow before 2012 but the oil ministry already predicts Gujarat and Assam will erect hurdles for explorers unless their demand is met.

"Our idea was to give them an incentive to make life easier for explorers." What now Under cabinet direction, Naik's proposal has been referred to the Finance Commission.