Nelp auctions caught in a tale of 2 reports

While the Rangarajan panel proposed a revenue-sharing model, the Kelkar panel pitched for production-sharing contracts

On February 15, the Ministry of Petroleum and Natural Gas will approach the Cabinet Committee on Economic Affairs (CCEA) for a nod to the 10th round of oil and gas auctions. At the centre will be a fight between the reports of two panels — one led by Vijay Kelkar and the other by C Rangarajan.

Last year, the panel headed by Prime Minister’s Economic Advisory Council chief C Rangarajan had proposed a revenue-sharing model for awarding contracts for oil & gas blocks. However, in a recent report laying a road map to enhance domestic production, the Kelkar-headed committee batted for the current model of production-sharing contracts for deep water oil & gas exploration. This model allows operators to recover costs in advance, before sharing profits with the government.

Sources say the ministry may opt for a mixture of the two models. “We will consider the Kelkar committee report, too, before the CCEA,” Petroleum Minister M Veerappa Moily told the media on Friday. Before the Kelkar panel gave its report, the government had planned to go ahead with the revenue-sharing model for the 10th round of New Exploration Licensing Policy (Nelp) auctions.

The Rangarajan panel had recommended contracts for blocks be awarded to bidders quoting the highest amount of oil or gas.

The ministry plans to auction 86 blocks during the 10th round of Nelp. Of these, 46 have already received clearances; these were showcased during Petrotech 2014, a flagship event of the Indian hydrocarbon sector. “We are hopeful of getting CCEA clearances for this by February 15 and road shows will start after that,” Moily said.

Decision on LPG cylinder cap
The minister added a decision on raising the cap on subsidised liquefied petroleum gas (LPG) cylinders per household per year from nine to 12 would be taken at the next CCEA meeting. “A Cabinet note in this regard was submitted last week and a decision will be taken at the next CCEA meeting,” he said.

In September 2012, the government had capped the number of subsidised LPG cylinders at six to keep a tab on the rising subsidy burden. However, following political pressure, it had to increase the cap to nine in January 2013. In Delhi, the price of a non-subsidised cylinder stands at Rs 1,258, compared with Rs 414 for a subsidised one. The decision to increase the cap was taken after Congress Vice-President Rahul Gandhi had pushed for this.

Moily said a Cabinet note on the subsidy-sharing mechanism and an increase in diesel prices would be circulated by January 31.

The guidelines for submission of bank guarantees by Reliance Industries for the D1 and D3 fields in the KG-D6 block will be finalised by February 10.