Amid concerns of the economic slowdown, the government today launched the eighth round of New Exploration Licensing Policy (Nelp-VIII) offering 70 blocks, the highest so far. The government is also offering 10 blocks under the fourth round of coal-bed methane (CBM-IV) exploration policy for exploration of gas.
“We are offering 24 deep-sea blocks, 28 shallow water blocks and 18 onland blocks for bidding in the eighth edition of Nelp,” Petroleum Secretary RS Pandey said. Bidding for CBM-IV and Nelp-VIII will close on August 10. In February, Pandey said the government would offer hundred blocks under the eighth round.
The government will organise promotional road shows in Mumbai, Perth, Brisbane, London, Houston and Calgary to attract investors. Investors’ meet has also been planned in Washington. The government will evaluate, finalise and sign the contracts by December 10 this year.
“The most effective antidote for meltdown or slowdown is generation of economic activity. The economic meltdown will not last forever. We hope the investors to take a long-term view. We will offer another 30-40 blocks by year-end if the response is good,” Pandey said.
Reiterating the point, V K Sibal, director general of hydrocarbons, said the current crude price of $50 a barrel is excellent. “The production cost is not more than $6 a barrel. Even after adding tax of $14-15, it comes to around $20-21 a barrel,” he said.
“Successful bidders would be required to make sizeable investment only after a few years of the award; therefore, any current capital constrains may not necessarily have a bearing on these decisions,” said Deepak Mahurkar, associate director, PwC. But investors may decide not to bid if they perceive the underground risks to be high, he added.
Pandey said the winners would get the same benefits that were offered during the Nelp seventh round. “There is no change in incentives that were offered in the seventh round,” he said. The main incentives include waiver of cess on the produce, seven-year income-tax holiday, a royalty of 10 per cent on shallow-water and onland blocks while deep-sea blocks would attract a royalty of five per cent. However, the income-tax concession would not apply to the ten blocks under CBM. In order to facilitate more participation, the bank guarantee amount has been reduced from 35 per cent of committed work programme to 7.5 per cent.
