NELP-VII bid deadline likely extension by one month

Vol 11, PW 24 (17 Apr 08) People & Policy

Market whispers of a possible NELP-VII bid deadline extension beyond April 25 seem to be true.

PETROWATCH learns the oil ministry’s exploration division has recommended extension of the NELP-VII bid deadline by a month beyond April 25. “The recommendation has yet to be accepted by the ministry,â€‌ confirms DGH boss VK Sibal, contacted by this report.

“We have asked for the extension so that there’s clarity on the issue of the seven-year tax holiday (for gas producers) by then.â€‌ Unless the finance ministry clarifies the issue – whether the tax holiday will or will not be allowed – says Sibal, “it will be very difficult for companies to put in bids.

â€‌ Since the confusion emanated from the budget announcement made to parliament by finance minister Palaniappan Chidambaram, “any clarification will have to be made in parliament itself.â€‌ Even if a clarification is made closer to the present deadline of April 25, adds Sibal, companies will need at least a month to factor it into their bids.

Sibal adds that oil minister Murli Deora and secretary MS Srinivasan are yet to take a decision on extending the deadline. Another DGH source is confident the tax holiday will be retained.

“Bidders need not worry,â€‌ he says. “Our oil ministry has been assured by the finance ministry that the tax holiday will be retained.

â€‌ Sadly, the message doesn’t seem to be getting through. On April 14 and 15, during a gas seminar in Delhi, several participants voiced concern at the lack of clarity from the government.

“It is very confusing,â€‌ said one overseas company. “The oil and finance ministries must make their position on this clear or it will send out a bad signal.

â€‌ Industry anxiety was also evident at an earlier NELP-VII workshop organised on April 7, when oil ministry director exploration VK Dewangan was unsuccessfully â€کcornered’ to give a firm â€کyes’ or â€کno’ answer on the tax holiday. Dewangan was also asked if the NELP-VII bid submission deadline would be postponed.

“We are in continuous dialogue with the finance ministry and hope the issue will be resolved,â€‌ is all he would say.

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