Deora wants rethink on profit oil to government

Vol 10, PW 18 (11 Jan 07) People & Policy

India is no nearer announcing the award of 52 blocks from NELP-VI than it was before Christmas! PETROWATCH learns the oil ministry has not even asked the cabinet to approve the awards and that oil minister Murli Deora has weighed into the argument over â€کerratic’ bids with some comments of his own.

Controversy continues to swirl around bids for 19 blocks where the government’s share of profit oil starts from a high of 90% and in some cases falls to just 1%. On 23rd November bureaucrats on the Empowered Committee of Secretaries rejected a DGH suggestion to call several of the bidders for direct negotiations.

Before approval by cabinet, the ECS sent its recommendations to the oil ministry. Deora, it seems, is not convinced that his ministry or the ECS took the right decision.

Last week he sent a handwritten note to oil secretary MS Srinivasan expressing concern. “(The) Legal consequences of using different interpretations to the term sliding scale in the NELP-VI (are) contrary to the previously used meaning,â€‌ says Deora.

“In NELP-VI (some of) the bidders have offered falling profit share to the government at high investments.â€‌ Deora agrees with critics that “if the blocks are of high discovery the government would not get the expected share in coming years.

â€‌ He also wants “clarification on the rules of NELP-VI to provide adequate ground to address the concern of loss of government earning.â€‌ Srinivasan has sent Deora’s note to joint secretary exploration AK Jain, who will most likely seek advice from the law ministry, a long process, which could delay the awards further.

Some believe the ministry has pushed itself into a corner. “The NELP-VI bid documents do not say whether profit oil should be on a sliding or climbing scale,â€‌ says an industry source.

“This was brought to the notice of the ministry before the bids were received. They should have issued a clarification saying profit oil to the government should not be on a declining scale.


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