Petromin seeks tax holiday for gas cos

MUMBAI: The petroleum ministry is seeking re-introduction of the seven-year income-tax holiday for natural gas producers in an attempt to make the next round of Nelp (New Exploration and Licensing Policy) bidding attractive. The finance ministry had withdrawn the tax holiday last year.

Confirming the move, petroleum minister Murli Deora told ET last week, ���We (petroleum ministry) have written a letter to the finance ministry in this regard last week. This incentive is important for attracting investments in the Indian upstream sector.���

The proposed tax exemption may be the key to the success of Nelp VIII, the country���s largest auction of exploration blocks, as oil companies across the world have been hit hard by the global credit crunch and declining crude prices, industry experts said. The auction will put nearly 100 exploration blocks up for grabs.

India attracted investment commitments worth $8.3 billion for exploration of oil and gas in the first seven Nelp rounds. Of this, about $4.5 billion has already been spent on exploration and $1.4 billion on the development of discoveries. An additional exploration expenditure of $1.5 billion is budgeted for Nelp VII. According to government data, 68 oil and gas discoveries in 19 blocks, with oil and oil-equivalent gas reserves of 500 million tonnes have been certified by DGH, India���s hydrocarbon regulator. The previous Nelp rounds failed to attract the US biggies.