Comments
In what must have come as some relief for the Government, bidding for oil and gas blocks on offer under NELP-IX (which closed yesterday) met with a better response than that seen under NELP-VIII. Out of the 34 blocks on offer in this latest and possibly last round of NELP (before the open acreage licensing policy comes into play), 74 bids were received for 33 blocks. Only one offshore block did not receive any bid. As against this, NELP-VIII saw bidding for only 36 of 70 oil and gas blocks, with a total of 76 bids received. Another positive feature in NELP-IX was the return of energy behemoth Reliance Industries (bid for 6 blocks), which had kept away from the NELP-VIII auction.
The decent response despite recent significant changes in tax laws would also have been reassuring for the Government. Earlier, the last date for submission of bids for NELP-IX blocks was extended from March 18 to March 28, ostensibly to provide more time for companies to decide on their bids, taking into account the changes in the tax regime proposed by Budget 2011. The recent budget has done away with the seven-year profit-linked deduction available for commercial production of mineral oil, for blocks licensed under a contract awarded after March 31, 2011 under NELP. With awarding of blocks and signing of production sharing contracts expected to take around three to four months, contracts under NELP-IX would likely not be eligible for profit linked tax incentives.
Yet, all is not hunky-dory. Participation by international oil majors has again been minimal with BHP Billiton, BG Group and East West Petroleum Corp among the eight foreign bidders. Despite the Government's assertions to the contrary, the ongoing uncertainty regarding the Cairn Energy – Vedanta deal may have played some role in the lacklustre participation.
Also, the predominance of public sector oil and gas companies continued in NELP-IX too, with ONGC bidding for a lion's share (29 blocks). 14 blocks received a single bid, with ONGC and its partners being the sole bidder in 10 blocks. A more broad-based participation would have been better representative of investor interest.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.