The Hindu Business Line : NELP bid deadline pushed back to May 16

New Delhi, April 18 Owing to the lack of clarity on the tax policy front, the last date of bidding for the seventh round of New Exploration Licensing Policy (NELP-VII) has been pushed back by about three weeks.

An official statement issued by the Petroleum Ministry here said that in view of the requests made by the industry the Government has decided to extend the bid submission date to May 16 from April 25. “The Ministry has been flooded with requests from prospective bidders for extension of bid submission date so as to enable them to form consortium with experienced exploration and production companies and also firm up their bid parameters. In view of these requests it has been decided to extend the submission date,” the statement said.

The uncertainties arising due to the tax proposal had led the industry to rethink their strategies. In the Budget proposal for 2008-09, the Finance Minister, Mr P. Chidambaram, has proposed ending a seven-year tax holiday for the production of oil and gas. The proposal said for the purpose of Section 80-IB(9) of the Income Tax Act — that gave tax holiday for mineral oil — the term mineral oil will not to include petroleum and natural gas. It also proposed to end income tax holidays for refineries commissioning after April 1, 2009.

This, according to industry sources, had led to lot of confusion as the bid documents offer the tax holiday, but the Budget proposal withdraws it. A final picture on the issue will emerge only when the Finance Minister replies to the Budget proposals. The industry has sought an extension of deadline in order to get clarity on the issue before they frame their bids, sources said.

Absence of clarity

Under the current situation, in the absence of clarity, companies will make their own assumptions and submit bids. Some will assume the tax holiday is there and some may think it is not there, so bids will be different, industry sources said.

The Government has offered 57 oil and gas blocks under NELP-VII. The bids for NELP-VII were originally due on April 11, but were rescheduled for April 25 to allow firms more time to view data. The Petroleum Minister, Mr Murli Deora, met the Finance Minister earlier this week to seek an early resolution on the issue.

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