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PM gives a month to settle oil block row

New Delhi, Jan. 30: Prime Minister Manmohan Singh today directed the oil and the defence ministries to settle within a month their differences over 39 oil and gas blocks awarded to firms such as Reliance and ONGC.

The inter-ministerial logjam was affecting investments worth $20 billion in exploration and production, particularly in the Krishna-Godavari basin.

Many analysts felt that a month was too long a period, especially as the Prime Minister gave the orders today in the first meeting of the Cabinet Committee on Investment, which was formed to facilitate speedy clearances to infrastructure projects of more than Rs 1,000 crore.

However, others said the time period indicated the complex nature of the issue. Besides, it did send a positive signal that the government was keen to resolve such problems in a time-bound manner.

“Today, the CCI discussed the hurdles being faced by the petroleum sector. We have discussed 39 blocks in total,” Manish Tewari, minister of information and broadcasting, said after the meeting.

Officials said the PMO would be monitoring the inter-ministerial discussions and could help in narrowing the differences.

The oil ministry had objected to the defence ministry’s decision to impose stringent conditions on exploration in 32 oil and gas blocks. The defence ministry had also tagged 14 blocks as “no go” as they overlapped or were close to a proposed naval base or missile launching range.

At stake are ONGC’s 22 blocks, 15 of Reliance-BP and five of BHP Billiton, besides others belonging to Cairn and Santos. Many of the blocks are off the eastern coast in the Krishna-Godavari basin and the Mahanadi basin.

Sources said the conditions imposed include companies not locating any pipelines or structures on sea surface.

The oil ministry wanted relaxations on the conditions set for the 32 blocks and clearance for the 14 blocks declared as no-go.

The oil ministry feels non-clearance of the blocks will lead to exodus of foreign companies and a loss of credibility of the government, besides adversely impacting the investment climate and generating litigations.

At the CCI meeting, the defence ministry softened its stand and reduced the number of no-go blocks to seven.

“Specific timelines have been fixed. Both ministries have been asked to come back to the CCI within one month’s time. Over the next one month you will have concrete and positive movement,” Tewari said.

 
 
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