New oil blocks up for auction with no more tax breaksOctober 15th, 2010 - 2:31 pm ICT by IANS
New Delhi, Oct 15 (IANS) India Friday launched the ninth round of auction of its hydrocarbon assets for 34 blocks, including eight deep water ones, but removed the tax exemptions given to investors in the crucial sector.
“NELP 9 (New Exploration licensing Policy) is being launched in the background of positive economic conditions, including revision of APM (administered price mechanism) gas price and market determination for price of petrol,” Petroleum Minister Murli Deora said at the inauguration.
The 34 blocks, which include 15 recyled blocks cover a sedimentary basin area of 88,807 square km. The deadline for making a bid for the blocks is March 18, 2011.
Eight rounds of NELP are over, resulting in 235 blocks being awarded and $14 billion dollar based on NELP.
However, investors will not be able to avail any profit or income-based tax incentive now onwards as the government is planning to do away with these perks under the new Direct Tax Code (DTC).
“Investors basically want clarity in NELP 9. Position is absolutely clear,” said petroleum secretary S. Sundareshan.
The DTC once in force will apply to all production sharing contracts in the future including under NELP IX, added Sundareshan.
Till it does, the production sharing contracts will be governed by the existing income tax laws.
Under the current Income Tax Act, companies that started crude oil production before April 1, 1997 are exempted from paying taxes on profits for seven years. Refineries, which started operations after Oct 1, 1980 and before March 2012 are also eligible for the same level of incentive.
However, no tax breaks are given to natural gas finds, except for the gas that is to be produced from NELP 8 blocks and the four coal bed methane (CBM) 4 blocks.
Sundareshan said the move would not have any adverse impact on investments into the sector, but would only help companies design bid documents better.
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- ONGC-Videsh favours joint exploration with Russian firms - Mar 20, 2010
- Murli Deora expects India and US collaborate in shale gas exploration - Oct 18, 2010
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Tags: adverse impact, basin area, coal bed methane, crude oil production, deep water, economic conditions, gas price, hydrocarbon, inauguration, income tax act, income tax laws, murli deora, new oil, oil blocks, paying taxes, price mechanism, refineries, sedimentary basin, tax exemptions, tax incentive