India offers incentives to state-owned oil and gas firms

Mumbai: Oil and Natural Gas Corp Ltd and Oil India Ltd will pay royalty and cess tax only to the extent of their equity holding in oil and gas blocks given to them before 1999, Mr Dharmendra Prasad, Minister of Petroleum & Natural Gas, Government of India, said on Wednesday after a cabinet meeting. This is said to be a great incentive for the two state-owned companies to invest in production growth of blocks. The companies had to pay 100 royalty and cess tax under the earlier production sharing contract.

The government of India has also extended the time period given to oil and gas companies to develop hydrocarbon blocks in the north eastern part of India. Production from these blocks will be linked to market prices of natural gas, according to Mr Dharmendra Pradhan. The government has also decided to give tax exemption on capital spending on oil and gas blocks given before 1999.

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