No tax break may leave next NELP bid a lacklustre affair

The next bid round for oil and gas acreage is likely to be adversely impacted due to lack of an income tax break on gas production, Petroleum Minister Murli Deora said today.

The 8th bid round under the New Exploration Licensing Policy (NELP), likely to be announced in next few weeks, is being held under the shadow of a global credit crunch and low oil prices as well as crisis of confidence in the policy regime offered by India.

"We had asked Finance Ministry for income tax holiday for natural gas production (similar to the one already enjoyed by crude oil), but it hasn't come through," he said here.

 

The Finance Ministry had last year withdrawn tax breaks for gas production and it is only available for crude oil discoveries.

This, despite the fact that more gas, like the giant KG-D6 field of Reliance Industries, has been discovered in NELP blocks offered in previous rounds and gas is a cleaner fuel with negligible carbon footprint.

"Lack of tax holiday for gas production has reduced interest among companies in NELP. I fear it may get reflected in the bids we receive," Deora said.

India has in previous seven rounds awarded 206 areas. 44 out of the record 57 blocks offered in NELP-VII had received bids after the withdrawal of tax holiday.