Petroleum Minister Murli Deora today said the government is working on granting tax incentives for companies on production of natural gas from oil blocks awarded to them.
Deora said the Petroleum Ministry is trying to get a seven-year tax holiday on gas production from oil blocks that would be awarded to bidding firms under the soon-to-be- commenced New Exploration Licensing Policy (NELP) VIII.
"It is very important that companies get tax incentives on gas. We are working with the Finance Ministry and the Revenue Department for a tax holiday on gas," Deora told reporters here.
Under the NELP Policy, potential bidders for oil blocks have been assured of a seven-year tax holiday on crude oil from the beginning of commercial production.
Income-tax authorities have not allowed the same relief on gas production due to the lack of specific inclusion of the term "Natural Gas" in the Income-Tax Act.
"I hope the benefit is also extended to NELP VII parties," Deora said.
On the free market pricing of fuel or APM (Administered Pricing Mechanism) dismantling, the oil minister said, "It will take time. We are still not prepared for dismantling the price regime."
He said one needs to wait as there was no certainty on global crude prices remaining stable.
Under the APM regime, instead of allowing market-based pricing, the government decides prices at which petroleum products would be sold. On paper it was done away with in 2002, but with little success.
