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Though the new policy was announced early last year, bids could not be invited
New Delhi Aug 21: Petroleum ministry has moved the cabinet for changing the existing royalty provisions through an ordinance to kickstart the oil exploration process under the new exploration licensing policy by next month.
New Delhi Aug 21: Petroleum ministry has moved the cabinet for changing the existing royalty provisions through an ordinance to kickstart the oil exploration process under the new exploration licensing policy by next month.
The ministry is taking the ordinance route as parliament could not pass the Oilfields (Regulation and Development) Amendment Bill, 1998, introduced in Lok Sabha on July 27, official sources said.
Though the new policy was announced early last year, bids could not be invited for want of changes in royalty and income tax acts to cover greater risks and high levels of investment for oil exploration, particularly in the high seas.
The oil ministry is wanting to invite bids for about 50 onshore and offshore oil blocks, identified by the Director General of Hydrocarbons (DGH), by end of this month or early September, the sources said.
While the changes in income tax act have already been taken care of, the ordinance will have enabling provisions for pegging the royalty rates for crude oil at 12.5 per cent of the international value for the onland areas and 10 per cent for offshore areas, the sources said.
The changes sought by the ministry include powers to notify more than one rate of royalty in respect of the same mineral oil produced from different classes of leased areas and empowerment to grant partial or full exemption from the payment of royalty in respect of offshore areas.
As per the new policy, royalty would be payable at different rates depending on the locations and depth of the offshore fields, while the present act does not permit laying down of more than one rate of royalty, the sources said.
The present provisions also restrict the revision of royalty to once in three years and the changes have been necessitated due to phased dismantling of the administered pricing mechanism of crude and petroleum products from April 1, 1998, wherein crude oil prices have been linked to international prices.
Petroleum ministry sources said there was also a move to cut down the bidding period from the existing six months by about one third so that contracts are finalised in a year.
DGH has conducted surveys and mapped the oil blocks and deep water oil fields and the information is available to the interested oil companies.
Sources said that DGH has already sold many such packages to fetch about five million dollars in foreign exchange.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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