The Telegraph
Saturday , January 25 , 2014
CIMA Gallary

LPG quota hike on track

Moily: Task at hand

New Delhi, Jan. 24: A proposal to increase the quota of subsidised cooking gas cylinders to 12 in a year will be taken up by the Cabinet Committee on Economic Affairs (CCEA) at its next meeting, petroleum minister M. Veerappa Moily today said.

“The cabinet note on LPG quota was circulated last week, and may be cleared in the next meeting,” he said.

At the AICC session last week, Congress party vice-president Rahul Gandhi had made a strong pitch to increase the quota.

Raising the limit to 12 would result in an additional fuel subsidy burden of Rs 3,300-4,000 crore. The government already pays about Rs 46,000 crore per annum as LPG subsidy.

The government had initially capped the supply of subsidised cylinders to six per household in September 2012. It was raised to nine in January 2013.

Nelp norms

Moily indicated that at least 46 oil and gas blocks would be auctioned in the current financial year. A cabinet note on Nelp X with details of the policy and revenue sharing model is likely to be taken up by the CCEA in early February.

Earlier, the petroleum ministry was considering a mechanism recommended by the Rangarajan panel which favoured a production-linked revenue sharing model. However, another panel headed by Vijay Kelkar suggested that the existing mechanism — cost recovery — was right.

“We would like to ensure that before we put out bids, the clearances should be in place,” Moily told reporters.

The ministry will also circulate a cabinet note on allowing Reliance extra time to conduct various tests to prove five natural gas discoveries. “The CCEA note will be circulated by January 31,” Moily added.

Moily said the oil ministry would go to the cabinet soon seeking a minimum $65 per barrel price for state oil and gas explorers such as ONGC.

The move is expected to help bring in 70 million tonnes of oil to production.

Moily said his Ministry would seek CCEA nod to allow Reliance Industries to conduct the drill stem test (a procedure to establish hydrocarbon discovery in acreage), as the stipulated time to conduct such a test is over.

“The CCEA note would be circulated by January 31. The explorer has agreed for it,” Moily added.

The explorer and upstream regulator Directorate General of Hydrocarbons (DGH) are at different views over three discoveries — D29, D30 and D31— in the KG basin.

According to the regulator, RIL should relinquish these fields as they fail to conduct drill stem test.


He said the oil ministry will go to the Cabinet soon seeking a minimum $65 per barrel price for state oil and gas explorers like ONGC.

The move is expected to help in bringing 70 million tonnes of oil to production.

”We will soon approach Cabinet on the issue of capping the subsidy share of upstream companies,” Moily said.

Upstream companies (like ONGC and Oil and India) bear disproportionately high subsidy burden. Around $65 is the minimum price that is needed to help bring marginal and deeper fields into production.

The Kirit Parikh Committee, last year, advocated reducing upstream subsidy burden and Oil Ministry.