Govtderegulatesdomesticcrude
The move will ensure marketing freedom for all exploration & production operators
NEW DELHI: Amid a sharp surge in India’s oil import bill due to the ongoing geopolitical tension, the Union cabinet chaired by Prime Minister Narendra Modi on Wednesday decided to deregulate the supply of domestically produced crude from October 1.
So far, the public sector exploration and production companies were able to sell the domestically produced crude oil to government refineries, and now post the decision, these exploration companies would be able to sell crude to other private refiners.
A statement from the ministry of petroleum and natural gas said that the decision will ensure
marketing freedom for all exploration and production (E&P) operators as the condition in the production sharing contracts (PSCs) to sell crude oil to the government has been waived off.
“All E&P companies will now be free to sell crude oil from their fields in domestic market. Government revenues like Royalty, cess, etc. will continue to be calculated on uniform basis
across all contracts,” said the statement, adding that exports will not be permissible as earlier.
Addressing the media, Union minister for information and broadcasting Anurag Thakur said: “Now, companies can sell their crude oil to any private company in the domestic market along with the government companies.”
According to the government the decision will further spur economic activities, incentivise making investments in the upstream oil and gas sector and builds on a series of targeted transformative reforms rolled out since 2014.
India’s oil import dependency over the years has risen, widening the trade deficit and putting further pressure on the domestic currency, which has slumped to its lowest against the US dollar.
The percentage of crude oil import out of total crude oil processed has surged to 89.4% in 2020-21 from 87.1% in 2015-16.
Although government has made efforts to increase crude oil production, the domestic crude production has been in decline since the financial year 2014-15 (FY15), dropping to just 28.4 million tonnes (MT) in FY22.
Among other decisions, the cabinet approved the computerization of Primary Agricultural Credit Societies (PACS). The government said the project proposes the computerization of about 63,000 functional PACS over a period of five years with a total budget outlay of ₹2,516 crore with the government’s share of ₹1,528 crore.
“The PACS constitute the lowest tier of the three-tier shortterm cooperative credit in the country comprising about 13 crore farmers as its members, which is crucial for the development of the rural economy. PACS account for 41% (30.1 million farmers) of the KCC (kisan credit card) loans given by all entities in the country and 95% of these KCC loans (29.5 million farmers) through PACS are to the small and marginal farmers. The other two tiers viz. State Cooperative Banks and District Central Cooperative Banks have already been automated by the NABARD and brought on Common Banking Software,” said an official statement statement.