Unified licensing policy in the offing, says Dharmendra Pradhan

In May 2014 Dharmendra Pradhan took over as the Union Minister of State (Independent Charge) for Petroleum and Natural Gas. Many expected him to face a series of roadblocks, including corporate interference. But, barely seven months into his tenure, Pradhan is comfortably placed, much to the envy of his predecessors. Since he took over, crude oil prices have hit a historic low, allowing him to decontrol diesel and fix gas prices. He hopes to finalise strategic reserves now that most of the supply-side constraints have been addressed. The minister told Anilesh S. Mahajan that the government is working to curb leakages, increase efficiency and ensure the country's energy needs are secured. Edited excerpts from an interview:

Q- By levying additional duties, Finance Minister Arun Jaitley has used the situation well to increase revenues. How do you, as the oil minister, plan to use this opportunity?

A- All ministries are working as a team and not in isolation. The government has decided to keep prices of petroleum products within a comfortable range. The additional cess and excise duty will help create additional infrastructure. Now that diesel is decontrolled, oil marketing companies are ensuring prices are revised at regular intervals.

Q- The Centre can take this opportunity to fill up strategic reserves. Who will fund the caverns?

A- There is complete clarity on this front. The government will fund them. The cabinet decision on strategic reserves empowers the government to do it. There is no ambiguity. As a sovereign state, the government will have to fund the crude. We are talking to various global oil producing companies to source oil. The caverns will be complete by February, and we expect to receive the first consignment soon after. The filling up of these reservoirs will start in the current financial year.

Q- Now that the subsidy burden is lower, can we expect oil producing companies such as ONGC and OIL, which have historically shared the burden of oil marketing companies, to get some relief?

A- The oil ministry has written to the finance ministry to exempt these companies. Deregulation of diesel, softening of crude oil prices and other petroleum products have provided the government with a chance to revisit the subsidy-sharing formula. The final decision, however, is yet to be taken.

Q- The central government has pushed for direct benefit transfers to LPG consumers. What has been the response, and how do you plan to take things forward?

A- The response has been good. As of January 12, 59.5 per cent of LPG subscribers have enrolled in the scheme. We have been meeting our internal deadlines, and will be able to successfully transfer subsidies directly to bank accounts from March 31. When the prime minister had talked about opening bank accounts for every Indian in his Independence Day speech, many thought it would be an uphill task. But, the goal has been achieved. We have been getting great response, and, soon, LPG consumers will get the subsidy transferred to their bank accounts.

Q- The CAG had said that diversion of funds meant for the MNREGA schemes had taken place despite direct transfers to beneficiary accounts. There might be similar concerns over direct transfers for LPG. Please share your experience.

A- We are following a judgment, where the court had observed that Aadhar is not mandatory for transfer of benefits. Having a bank account is good enough. We are trying to make the process simpler and transparent. Out of the nine crore beneficiaries, over three crore who have bank accounts have benefitted from this relaxation. We have also been proactive in addressing complaints from them. 

A- Kerosene oil pricing and subsidy is a more complex issue. We are in talks with state chief ministers before chalking out a strategy. Every state has its own issues, and many of them are genuine. It will take some time to resolve.

Q- The UPA had announced the New Exploration and Licensing Policy (Nelp-X) rounds, but the decision on production-sharing contracts remained unresolved. What is the scenario now?

A- We are discussing the revenue model for these blocks. A decision will be taken soon. The blocks will be disbursed in the most transparent manner. We have a10-point internal reforms initiative to remove the bottlenecks of the existing system and to make it more efficient. We believe it would also help increase production from existing fields.

In an effort to further exploit India's assets in marginal fields, a new policy is also being framed. After inspecting these fields, ONGC and OIL have said that they may not be commercially viable. However, though the PSU oil companies will continue to hold the licences, private players can explore the fields. We feel there will be enough excitement among private players to start production. We are also contemplating a unified licensing policy, where the licensee will get automatic clearances to explore even if he finds other minerals, including shale, coal, coal-bed methane, oil or gas. This may change the way exploration is done today.

Q- The coal ministry also seems to be on the same page on this. They are already in the process of e-auctioning several mines.

A- We are in discussion with them as well. In the future, auctions of coal mines will have these provisions. Officials from both ministries are ironing out the issues, which are related to the technological competence of miners.

Q- The government has also succeeded in fixing gas prices without political controversies. However, there has been some criticism on keeping gas abundant indexes, such as the one in Russia. What's your take?

A- All four indexes, Henry in the US, Balancing Point in the UK, Canada's Alberta and Russian are gas-based hubs and have been the best available marks. The vision of the government is to make India a gas-based economy as well. We are looking for ways to secure energy that would include cheaper imports, ensure overseas assets, increase domestic production, introduce technological advancements and focus more on conservation of energy.