Moily for Kelkar committees view on Rangarajan panel suggestions

Petroleum minister Veerappa Moily has ordered that the newly-formed Kelkar Committee would preside over the recommendations of the Rangarajan Committee on the changes in the fiscal regime for boosting oil and gas output

Petroleum minister Veerappa Moily has ordered that the newly-formed Kelkar Committee would preside over the recommendations of the Rangarajan Committee on the changes in the fiscal regime for boosting oil and gas output.

Going against his officials advice,Moily expanded the terms of reference of the Kelkar panel asking it to give its views on the recommendations of the Rangarajan Committee of moving from production sharing contracts to revenue sharing contracts.

Dr Vijay Kelkar,appointed by Moily last month to prepare a roadmap for boosting domestic output of oil and gas by 2030,has opposed Rangarajans counsel to do away with the system of cost recovery in which explorers recover their costs from oil and gas revenue before sharing the residual profit with the government.

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Kelkar was Petroleum Secretary when the existing New Exploration Licensing Policy was framed. Excess cost recovery through inflated expense is the main cause of conflict between the CAG and private exploration firms.

Ministry officials had opposed the expanded terms of reference on grounds that Kelkar would defend his NELP framework.

But Moily struck it down saying that the officials opposition almost amounts to casting aspersions on the impartiality of the (Kelkar) Committee which is not warranted. I do not see any scope for conflict of interest, Moily wrote on April 3.

C Rangarajan,chief of Prime Ministers Economic Advisory Council,has suggested India move to revenue sharing without cost recovery and his counsel was endorsed by finance minister P Chidambaram who announced last Budget that oil and gas exploration policy will be reviewed to move from profit sharing to revenue sharing contracts. Moilys memo also rebuffs FMs Budget pledge to remove uncertainties on natural gas pricing as the April 3 note directs that Rangarajans pricing formula would be an ad hoc arrangement until March 2017 with subsequent market-determined pricing based on Kelkar panels advice.