Arpita Mukherjee Ramneet Goswami January 2009 - icrier

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In 1997, the subsidiaries of CIL were restructured as financially independent competing units. 91 The prices of coking and higher-quality steam coal (quality grades A to C) were deregulated in 1996. In 2000, the Colliery Control Order, 1946 was replaced by the Colliery Control Order, 2000 which fully deregulated coal pricing. This allowed coal producing companies (CIL and SCCL) to fix their own prices and revise the same. 92 The coal sector has been one of the few sectors which witnessed limited liberalization. The sector is dominated by PSUs and foreign/private players are only allowed to invest in captive coal mining. At present, there is a Screening Committee constituted of members from the Ministry of Coal and other ministries (such as railways, electricity and steel), the concerned state government, and the concerned coal subsidiary of CIL, among others that decides the allocation of captive coal blocks. 3.1.2 Oil and Gas The Indian oil and gas sector is regulated by the Ministry of Petroleum and Natural Gas (MoPNG) and is dominated by PSUs. The Directorate General of Hydrocarbons (DGH) advises the government on all policy matters related to the upstream 93 segment while a Petroleum and Natural Gas Regulatory Board (PNGRB) has been set up under the PNGRB Act, 2006 to regulate the downstream 94 segment. Around 85 per cent of total crude oil production and 76 per cent of the total natural gas production are still in the hands of PSUs. 95 The share of the private sector is gradually increasing. For instance, during 2006-07, oil and gas discoveries were dominated by private/joint ventures such as Cairn Energy India Limited and Reliance Industries Limited (RIL). 96 The refining segment is also dominated by National Oil Companies (NOCs), such as Indian Oil Corporation Limited (IOCL) at 32 per cent, Hindustan Petroleum Corporation Limited (HPCL) at 9 per cent, and Bharat Petroleum Corporation Limited (BPCL) at 13 per cent, and their subsidiaries. 97 Among private players, RIL has a 22 per cent share in the refining segment. 98 The retailing segment is dominated by NOCs (98 per cent), which have one of the strongest and largest distribution networks. There were 36,921 retail outlets in April 2008, of which the share of NOCs was 93 per cent. 99 In the natural gas segment, the Gas Authority of India Limited (GAIL) is the dominant player with a market share of 78 per cent in the gas transmission business and 70 per cent in the gas marketing business. 100 In the retail segment of natural gas, the company has key joint ventures such as the Mahanagar Gas Limited (a joint venture between British Gas and the government of Maharashtra) in Mumbai and Indraprastha Gas Limited (a joint venture between Bharat Petroleum Corporation Limited and the government of Delhi) in Delhi. 91 International Energy Agency (2002a) 92 In December 2004, CIL introduced e-auctions to allow traders and consumers to bid for their requirements from preferred sources, thus, bypassing the black market in coal and transferring the premium from those sales to the coal companies. However, the bulk of coal was still sold to the power sector at regulated rates well below those prevailing in the auction market. Based on this contention, in December, 2006 the Supreme Court of India considered e-auctions unconstitutional and banned CIL from undertaking this activity. Nevertheless, CIL has introduced a new on-line booking system, that is, e-booking on a first-come first-served basis. 93 Upstream activities cover E&P. 94 Downstream activities cover refining and managing distribution and marketing (processing, storage and transportation). 95 Calculated from Table 10 (pp.11), Ministry of Petroleum and Natural Gas (2008). 96 http://www.petrodril.com/major_discoveries.htm 97 PPAC (2008) 98 PPAC (2008) 99 Ministry of Petroleum and Natural Gas (2008) and PPAC (2008) 100 http://gail.nic.in/gailnewsite/businesses/gastransmission.html 29
Prior to Independence, the Indian oil industry was controlled by a few Anglo-American companies which maintained their dominance till the end of the 1950s. The Industrial Policy Resolution of 1948 and 1956 brought this sector under direct government control and reserved the future development of the oil industry to PSUs. Consequently, the NOCs, namely, ONGC and Oil India Limited (OIL) monopolized the upstream segment. In 1976, the government nationalized the refining and marketing sector and introduced regulatory controls on production, import, distribution and pricing. The first step toward liberalization was in 1979 when the government introduced private participation in the upstream segment by providing licenses. Different sedimentary basins were offered to foreign oil companies for E&P. Better basins with liberal terms were offered in successive rounds. 101 At the same time, in the refining segment, the government allowed Indian private companies – initially as a joint venture partner with a public sector refining company. 102 In 1992, the government offered contracts for 18 discovered fields to companies such as Enrol Oil and Gas Company, Command Petroleum, Videocon Petroleum Limited, Ravva Oil Private Limited and RIL. These, however, did not lead to much investment as the exploration activities were initiated only in a few (15 per cent) potential oil-bearing areas and there were delays in awards of contracts. To facilitate the inflow of technology and generate investment, the government introduced the New Exploration Licensing Policy (NELP) in 1997. Under this policy, interested parties could bid directly without the mandatory participation of NOCs and carried interest 103 of the Government/NOCs. ONGC and OIL were required to compete to obtain oil blocks instead of getting them on a nomination basis as had been the case in the past. Various other incentives were given to encourage private investment, such as seven years of income tax holiday from the commencement of commercial production and abolition of customs duties on import of equipment for exploration operations. The companies were also given the freedom to market gas within the country. So far, six rounds of NELP have been completed and a total of 162 (onshore and offshore) blocks have been awarded. Of these, 37 blocks have been awarded to 25 foreign companies including British Gas (UK), Cairn Energy & Premier Oil (UK), Canoro and Niko (Canada), ENI (Italy), Gazprom (Russia), Geopetrol (France) and Santos (Australia). 104 The seventh round was also closed for bidding in April 2008, in which 21 foreign companies and 75 Indian companies participated. 105 In June 1998, the Government de-licensed the refining sector. Private refineries have been permitted to import crude oil without an import license for actual use in their own refineries and refineries could be set up without specific government permission subject to other statutory requirements. After the de-licensing, RIL set up India’s first privately-owned refinery in 1999, which is one of the major contributing factors behind the enhancement of refining capacity. 101 For example, in the third round of bidding (1986), where a few major foreign companies participated, the government exempted them from paying any royalty. 102 http://www.indiaresource.org/issues/energycc/2003/globpetroleumindust.html 103 Carried interest was exercised by the NOCs only after commercial discovery. In pre-NELP rounds, NOCs had the right to take up to 40 per cent share in all offered blocks (mandatory 10 per cent at the beginning and 30 per cent after commercial discovery). 104 http://petroleum.nic.in/speeches/08-01-2008.doc; http://www.pcra.org/English/general/Profile%20-07.pdf 105 India Infoline (2008) 30
Page 1 and 2: Working Paper No. 231 Trade in Ener
Page 3 and 4: List of Tables Table 2.1: World Lea
Page 5 and 6: Abstract Energy plays a vital role
Page 7 and 8: Abbreviations AERB Atomic Energy Re
Page 9 and 10: Units Units Full Form Remarks BkWh
Page 11 and 12: can be further divided into Renewab
Page 13 and 14: W/120 CPC No. Description 1.F.h 883
Page 15 and 16: The top five coal producing and con
Page 17 and 18: Table 2.10: Five Largest Natural Ga
Page 19 and 20: Nuclear energy accounts for almost
Page 21 and 22: developing countries including Indo
Page 23 and 24: production. By the end of 2001, pri
Page 25 and 26: 2.1.4 Renewable Energy The need to
Page 27 and 28: The impact of privatization varied
Page 29 and 30: agreements. Countries have formed g
Page 31 and 32: accounted for about one-quarter of
Page 33 and 34: petroleum products grew at the rate
Page 35 and 36: India is the leading country in Asi
Page 37: economy was dependent on non-commer
Page 41 and 42: within each sector. Three technolog
Page 43 and 44: other stakeholders keeping in view
Page 45 and 46: 1.F.m 8675 Related scientific and t
Page 47 and 48: 3.3 Trade in Energy Services Econom
Page 49 and 50: State India Limited, Shell Hazira G
Page 51 and 52: implementation agreement for the Pu
Page 53 and 54: In December 2006, the US Congress p
Page 55 and 56: 3.4.1.1 Coal Although India has one
Page 57 and 58: 3.4.1.3 Renewable Energy One major
Page 59 and 60: due to lack of policy clarity. 160
Page 61 and 62: adversely affected India’s trade
Page 63 and 64: important mode for trade in this se
Page 65 and 66: Accordingly, WTO members made bilat
Page 67 and 68: emove or substantially reduce MFN e
Page 69 and 70: 4.3 India’s Negotiating Strategy
Page 71 and 72: unbound for pipeline transportation
Page 73 and 74: The energy sector has long been und
Page 75 and 76: for identified technologies. Indian
Page 77 and 78: There should be new regulations whi
Page 79 and 80: sector, the government should set u
Page 81 and 82: Conclusion Given the unequal distri
Page 83 and 84: Bibliography Artemiev, I, and M. Ha
Page 85 and 86: Ministry of Commerce and Industry (
Page 87 and 88: Iran Daily, ‘India Approves TAPI
Page 89 and 90:
http://powermin.nic.in/indian_elect
Page 91 and 92:
providers to enter and operate in d
Page 93 and 94:
Table B 3: World Top Natural Gas Ex
Page 95 and 96:
efficiency. 188 The ECT also includ
Page 97 and 98:
Coal, Energy Efficiency and Conserv
Page 99 and 100:
1. Coal The Ministry of Coal is the
Page 101 and 102:
Table E 1: India’s Nuclear Reacto
Page 103 and 104:
W/120 CPC No. 1.F.e 8676 (partial)
Page 105 and 106:
NO. TITLE 230 229 228 227 226 225 2
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