Journalism of Courage
While the petroleum ministry dithers on moving auction of oil and gas blocks from the existing profit-sharing mechanism,scam-hit coal ministry has junked this model in seeking bids for coal blocks in future.
In a proposal to the Cabinet Committee on Economic Affairs,coal ministry says that the risk to the bidder was minimal in profit sharing and it required greater vigilance in checking fudged costs a charge similar to that levelled by the CAG while auditing some of the oil and gas blocks.
Instead it supports the revenue-sharing model where bids need to be submitted in rupees per tonne that the bidder would pay as the governments share. Government share is calculated in rupees coal produced multiplied by the quoted rupees-per-tonne. From the options,revenue share and rupees per tonne approaches do not require active monitoring of costs of the bidder which is a difficult exercise, it adds.
Revenue sharing was suggested by the Rangarajan Committee last January in auctioning of oil and gas blocks under the New Exploration Policy instead of the cost-recovery based profit sharing. But new petroleum minister M Veerappa Moily sent it in a tailspin by asking another panel headed by Vijay Kelkar for a relook.
The Kelkar committee,entrusted to suggest steps for enhancing domestic oil and gas production,was given the additional job after he asked to put on hold a decision on Rangarajans suggestion for conversion to the revenue-sharing model.
In September 2011,the CAG had asked the petroleum ministry to review the profit-sharing formula for future production sharing contracts and inspect all high value purchases by the contractor to check goldplating. The coal ministrys CCEA note circulated last week proposes production-linked revenue sharing,as reported by The Indian Express on July 16. It says that the floor/reserve price for each block would in rupees-per-tonne and fixed upfront by using the discounted cash flow method.
The successful bidder would have to pay 10 per cent of the intrinsic value of the coal block as upfront payment to ensure that the winning bidder has some minimum commitment to develop the block right from the start.
In a proposal to the Cabinet Committee on Economic Affairs,coal ministry says that the risk to the bidder was minimal in profit sharing
Instead the ministry supports the revenue-sharing model where bids need to be submitted in rupees per tonne that the bidder would pay as the governments share
Revenue sharing was suggested by the Rangarajan Committee last January in auctioning of oil and gas blocks under the New Exploration Policy
