Cut red tape if you want NELP-IX to succeed

Vol 14, PW 5 (26 Aug 10) People & Policy

When licensing rounds approach, oil officials in India routinely hype up the fiscal incentives on offer to private players.

These include tax holidays on oil production, duty-free equipment imports, and a host of other goodies. The run-up to NELP-IX, set to be launched on September 30, promises no different.

Yet behind the hype, private sector explorers say the frustrating web of approvals and clearances companies need in India will result in NELP-IX being a flop, just like the last round, NELP-VIII. “It’s very difficult to work in India,” says one operator.

“A lot of clearances are needed. And then you have the sorry spectacle of different government agencies not communicating.

Once you’re in India, getting out is even more difficult!” This operator cites several cases where foreign players leave India only to continue receiving endless queries from Indian tax authorities nearly five years later. Another ringing complaint is that the Indian oil and finance ministries don’t communicate.

“When we go to customs authorities with Essentiality Certificates (for duty free imports),” he says, “officials say they recognise duty-free concessions but will interpret them at their discretion. It makes you wonder what’s going on!” Then there is the absurd requirement that any drillship coming for oil and gas operations should be ‘customs-cleared’.

“One can understand a cargo or consignment being cleared,” we are told, “but it defies logic to insist on this for an entire maritime vessel.” No one in Delhi, argue investors, is listening to the long-held demand for a ‘single window’ facility to handle all clearances.

“There’s very little or no coordination between the shipping, finance, oil, home and defence ministries,” we hear. “A lot of time and money is wasted going from one department to another.

” Before beginning operations, foreign players need to file paperwork with seven different government agencies three months in advance. “This time-frame could be much reduced if unnecessary clearances are eliminated,” we hear.

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