JOIN USThe government on Friday exempted customs duty on goods imported for producing oil and gas from 69 oil fields of ONGC and Oil India.
This aims at boosting domestic production of oil and gas. “Nil customs duty will apply to goods imported in connection with petroleum operations undertaken under specified contracts under the Marginal Field Policy (MFP),” a Revenue Department notification said.
The government is planning to auction 69 small and marginal fields of ONGC and Oil India which have 89 million tonnes of oil and gas reserves in them.
These fields could not be monetised over the years due to reasons such as high cost and constraints on technology. Under the new policy, exploration companies will be able to submit bids for exploiting these oil fields. These oil fields have not been developed earlier as they were considered as marginal fields, and hence were of lower priority.
With appropriate changes in policy, it is expected that these fields can be brought into production. In keeping with the principle of `Minimum Government Maximum Governance’, significant changes have been made in the design of the proposed contracts, according to sources.
The earlier contracts were based on the concept of profit sharing. Under the profit sharing methodology, it became necessary for the government to scrutinize cost details of private participants and this led to many delays and disputes. Under the new regime, the government will not be concerned with the cost incurred and will receive a share of the gross revenue from the sale of oil and gas.The new policy for these marginal fields also allows the successful bidder to sell at prevailing market price of gas, rather than at administered price.