Oil’s Changed and Gas Who’s Behind It. No more punning around, let’s get down to serious business just like our no-nonsense Minister, Dharmendra Pradhan.
I remember the day this low-profile yet extremely focused minister, Dharmendra Pradhan took charge of the high-profile petroleum and natural gas ministry, almost two years back. The corridors of Shastri Bhawan — that houses the oil ministry were abuzz with activity of visitors and officials from the PSUSs, waiting to greet the new minister and present him with bouquets and garlands. This is the usual protocol followed and familiar to those acquainted with the ministry.
As the frolic faded, the real task began and Pradhan got down to business. Inheriting a ministry that is caught in a web of controversies, Pradhan faced some real tough challenges initially. But as an undeterred minister, Pradhan was confident that he would soon bring about a change that will transform the image of this ministry from a corporate oriented ministry to one that benefits the society at large and yet facilitates the right environment to do business in India’s oil and gas sector.
5th July 2014: Around two months into his tenure, I sat for my first interview with Pradhan (when I was working as a senior journalist in a leading main line daily), where I remember him telling me, “there is a need to establish India as a market with right practices.”
That was then and here we are today. I have no qualms in accepting that for the first time perhaps in the history of the petroleum and natural gas ministry, there is a clear shift in the focus of the ministry from being a contracts and private sector focussed ministry to the one that is emphasising on a lot of people-oriented schemes and policies while focusing on rural masses.
Some challenges that Pradhan faced included reducing the massive oil subsidy burden on account of non-revision of petrol, diesel and LPG prices. Pricing being a sensitive issue, any upward price change saw a massive political upheaval. Despite the consequences, he took the bold step of gradually increasing the prices of petroleum products in line with international prices and announced decontrol of diesel prices amidst strong political opposition.
However, as the LPG price hike directly affects households and women’s interests, he did not increase its price but also took on him the challenge to target subsidies to those who actually need it. And this saw the launch of the Direct Benefit Transfer (DBT) scheme as also the beginning of “The Give it UP Campaign” for LPG. The idea behind this campaign that started with the employees of state-owned oil companies and the government ministries and departments was to convince all those who have the capacity to pay should pay and say “no” to subsidies.
The results of this campaign are before everyone: As many as one crore people of India giving up their LPG subsidies voluntarily, a move that saved the exchequer a whopping over Rs 10,000 crore.
Such a huge success gave Pradhan enough confidence to launch the Ujjwala scheme to provide free LPG connections to the poor households for Rs 8000 crore. The “Pradhan Mantri Ujjwala Yojana” (PMUY) is presently the flagship scheme of Pradhan’s ministry and was formally launched recently by the Prime Minister, Narendra Modi on 1st May, 2016 in Ballia, Uttar Pradesh.
Under the PMUY, LPG connections will be given to the women of the BPL households. “Pradhan Mantri Ujjwala Yojana” scheme provides for free LPG connections to 5 crore women belonging to the Below Poverty Line (BPL) families over a period of 3 years starting from FY 2016-17.‘Pradhan Mantri Ujjwala Yojana’ provides free LPG to 5cr women of the Below Poverty Line (BPL) Click To Tweet
Priority will be given to those States where LPG coverage is lower than the national coverage. Currently, the process for setting up of more than 1800 new LPG distributorships is at different stages of selection across the country.
Both Pradhan and PM Modi have been lucky to have witnessed a regime when global crude oil and gas prices are at its all time low. Taking advantage of this trend, Pradhan visited oil and gas rich nations like Qatar, Saudi Arabia, Oman, UAE and negotiated and re-negotiated oil and gas contracts to help the country achieve its long term energy security goals.
He re-negotiated the price of gas that India imports from Qatar as LNG from the highs of $16 per mmBtu to less than $5 and that too under a long term contract for India. More such long term deals are being negotiate, says Pradhan.
Given the fact that India houses close to two dozen refineries, Pradhan has been focusing on making India emerge as a major refining hub in the entire South East Asian region.
In one of the biggest investments of over Rs 1.5 lakh crore (close to $22 billion), plans are afoot to build one of the world’s largest refinery— a 60 million tonnes per annum (or 1.2 million barrels per day) refinery in coastal Maharashtra.
According to Pradhan, this new proposed refinery on India’s west coast will be set up by the public sector oil companies including India’s largest oil refining and marketing company—Indian Oil Corp (IOC) along with Bharat Petroleum Corp., Hindustan Petroleum Corp. and Engineers India Ltd.
From NELP to HELP
New Hydrocarbon Exploration & Licensing Policy replaced New Exploration Licensing Policy Click To TweetAfter months on brainstorming, India’s New Hydrocarbon Exploration & Licensing Policy replaced New Exploration Licensing Policy (NELP) that has been in existence for 18 years. The new policy is another achievement of the Modi government to increase oil and gas production in the country while ensuring transparency and reducing bureaucratic and procedural bottlenecks.
The previous NELP regime had witnessed many controversies leading to major arbitration cases between the government and private producers of oil and gas in India.
The new policy regime or HELP marks a generational shift and modernization of the oil and gas exploration policy. It is expected to stimulate new exploration activity for oil, gas and other hydrocarbons and eventually reduce import dependence. It is also expected to create substantial new job opportunities in the petroleum sector.
The introduction of the concept of revenue sharing is a major step in the direction of “minimum government maximum governance”, as it will not be necessary for the Government to verify the costs incurred by the contractor. Marketing and pricing freedom will further simplify the process. These will remove the discretion in the hands of the Government, reduce disputes, avoid opportunities for corruption, reduce administrative delays and thus stimulate growth.
Investor’s confidence is returning and going forward the dream of exploiting the huge oil and gas resources lying unexplored in the country’s basins will soon become a reality. As we await the day, Pradhan moves unabated, working with the same zeal and enthusiasm to impart a fearless and transparent working environment in India’s petroleum sector.