The Hindu Business Line : NELP bid date likely to be postponed

New Delhi, April 17 For getting greater clarity on the tax policy front, the last date of bidding for the seventh round of New Exploration Licensing Policy (NELP) may be pushed from April 25. Official sources said, “There is no formal decision on the issue.” If a clarification comes by Monday, then the date may not be extended. However, the Ministry is understood to be weighing the option. A clarity on whether the seven-year income tax holiday for oil and gas production will be available or not would only emerge when the Finance Minister, Mr P. Chidambaram, replies to the Finance Bill in Parliament.

Under the latest NELP round, the Government has put on offer 57 oil and gas blocks. Discussions were on whether to extend it by two weeks or a month. However, no consensus has emerged so far. In his Budget proposal for 2008-09 Mr Chidambaram had announced withdrawal of income tax holiday (Section 80-IB (9)) for refineries commissioning after April 1, 2009. It also proposes that for the purpose of Section 80-IB (9) of the Income Tax Act — which gave tax holiday for commercial production of ‘mineral oil’ — the term ‘mineral oil’ will not include petroleum and natural gas.

This created confusion amidst the prospective bidders for NELP as the bid documents stipulate tax holiday for exploration companies. The investments in exploration activities are huge and without tax holidays production of natural gas would become less profitable.

The Petroleum Minister, Mr Murli Deora, met the Finance Minister on Tuesday to seek an early resolution of the issue.

The Ministry had earlier extended the last bidding date for NELP-VII from the originally proposed date of April 11 to April 25 to give exploration firms more time to view data.

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