Petroleum ministry says it supports including natural gas under GST

Decision that has to be taken by the GST council, says senior civil servant.

India's petroleum ministry said on Wednesday it "supported" the view that natural gas should be brought under the goods and services tax (GST), reacting after global energy industry major BP Plc called for it.

Petrol, diesel, jet fuel, crude oil and natural gas fall outside the GST ambit, but several industry groups want gas to come under the indirect tax regime.

"This is a decision that has to be taken by the GST council. There is a request from the industry and the ministry of petroleum and natural gas supports that request. The reason for this is that gas can be transported seamlessly across states and we will manage to develop one market for the gas," Tarun Kapoor, secretary in the Ministry of Petroleum and Natural Gas, told the media at the India Energy Forum by CERAWeek.

Kapoor was asked about if state-owned Bharat Petroleum Corporation (BPCL) would be sold this financial year. "We want divestment to happen as soon as possible. It is not handled by our ministry and is being done through an independent and transparent bidding process," he replied.

The government last month extended the deadline to bid for BPCL for the fourth time in a row, heeding requests from parties citing the pandemic situation.

Prospective bidders have said that it would be difficult for them to travel to India for due diligence of BPCL during the coronavirus pandemic. Kapoor said that a meeting between Prime Minister Narendra Modi and industry leaders didn’t discuss BPCL’s sale in their meeting on Monday night. The Cabinet approved the sale of government's entire 52.98 per cent stake in BPCL in November last year. Based on the current market cap of Rs 74,958.53 crore, the value of 52.98 per cent stake in the company is expected to be around Rs 39,713 crore.

Regarding the country's ambitious target of increasing the share of natural gas from 6 per cent in its energy basket to 15 per cent, Kapoor said, "Our target is to reach 15 per cent by 2030. On domestic production, three large discoveries will soon come into production. One in KG basin is going to start production from next month. Rajasthan is going to see a huge ramp-up in two months. Again in KG basin, we expect further production from ONGC in the next two years."

Reliance Industries Ltd (RIL) is working on three sets of discoveries, including R-Cluster, Satellite Cluster and MJ fields in KG basin. Both BP and RIL are set to jointly invest around $5 billion in order to bring into production three sets of natural gas fields.