Union Budget 2013 - 14: Natural gas pricing policy to be reviewed

Moneycontrol Bureau

Finance Minister P Chidambaram said the natural gas pricing policy will be reviewed. He also said that 5 million metric tonnes capacity LNG terminals in Dabhol will be operational in 2013-14.

The oil and gas exploration policy will be reviewed to move from profit
sharing to revenue sharing contracts. A policy to encourage exploration and production of shale gas will be announced. The natural gas pricing policy will be reviewed and uncertainties regarding pricing will be removed. NELP (New Exploration Licencing Policy) blocks that were awarded but are stalled will be cleared, the minister said while reading the Budget document

Meanwhiel, this is what oil and gas sector had expected from the Union Budget 2013-14

Clarity on subsidy sharing formula

The industry had expected budgetary measures to be focused on clarity on subsidy sharing formula for upstream companies. Oil retailers like Bharat Petroleum, Hindustan Petroleum and Indian Oil Corp are expected to incur Rs 160,000 crore losses in the current fiscal due to selling fuel at government rates.

De-regulating fuel

After the government de-regulated diesel last month, oil companies were hopeful that there could be some announcement regarding de-regulation of other petroleum products. Industry watchers believe market forces should drive prices and should be in-line with global trends.

Duty waivers

The industry had sought a waiver on customs duty on import of materials such as pipes, valves and flanges companies for laying gas pipelines and petroleum products.

Service tax refund

Companies involved in exploration and production activities currently pay a service tax. Companies had hopes of some breather either by way of refund or exemption as this levy impacts earnings.