The petroleum ministry has proposed turning the Oil Industry Development Board into a financial institution, on the lines of the Power Finance Corporation. It has sought a share of the crude oil cess to fund the board.
The finance ministry uses the cess to meet revenue requirements in the general budget. Of the Rs 1,04,000 crore oil cess collected till March 2012, OIDB has received Rs 902.40 crore so far. The petroleum ministry is seeking at least 75 per cent share of the collection.
The previous time OIDB got a share of the cess on the output of crude and natural gas was in 1991-92, which was Rs 95 crore. The government mopped Rs 12,121 crore through this cess in 2012-13.
A road map for turning the OIDB into a financial instituttion was being drawn up, an official said, seeking anonymity.
The board also needs funds because investments for strategic crude oil reserves have depleted its accumulated cash to Rs 8,000 crore from Rs 10,497.77 crore in March 2012.
Indian Strategic Petroleum Reserves Ltd, a special purpose vehicle set up by OIDB, is building oil storages in underground caverns at Visakhapatnam (1.33 million tonnes), Mangalore (1.5 million tonnes) and Padur (2.5 million tonnes). No revenue is expected from these reserves.
"The cess should be used for the development of the industry. Besides, a dedicated financial institution is needed for the sector. Funds are also needed for data collection and speculative survey,” said R S Sharma, former chairman of Oil and Natural Gas Corporation and head of the hydrocarbons committee of the Federation of Indian Chambers of Commerce and Industry
“The idea of a crude oil cess was to provide financial assistance for the development of the oil industry and hence, we are claiming it now. Moreover, with the government wanting us to be a part of the Rs 2,000-crore Indian Energy Insurance Pool, the OIDB needs further funding,” the official added.
The proposed fund is meant to provide insurance to Indian refineries using Iranian crude. The OIDB is set to contribute around Rs 1,000 crore to this insurance pool; the rest will come from public sector insurers.
“For the insurance pool, we have circulated a Cabinet note, though a decision will only be taken after a new government comes to power,” the official said.