I've long since come to believe that people never mean half of what they
say, and that it is best to disregard their talk and judge only their actions.
— Dorothy Day (1897-1980), social reformer
Gas produced under the New Exploration Licensing Policy (NELP) is governed by
the provisions of Production Sharing Contracts (PSCs) according to which the
contractor has the freedom to market gas produced from his area of operation, to
any part of India at market related price. This means that gas may not be
consumed at the point of production but transported to other areas.
Many a time this had become a political issue with local leaders campaigning
against transportation of gas to other areas rather than being used for the
development of the area where it was produced. Even the standing committee on
petroleum and natural gas has suggested that government should consider the
feasibility of making a provision in the PSCs for future rounds of NELP to
ensure that a certain percentage of gas is earmarked for the area from which it
Exploration is a highly risky and capital intensive business. Government opened
up the sector for private and foreign investment considering the huge investment
required in the field. In NELP terms, there is no investment from the government
side, but it shares profit as per the bidding conditions, in case of commercial
discovery. NELP has been designed to attract the investors for exploration as
per the practices followed internationally. In exploration inputs are
determinate, but the outcome of the efforts is uncertain. Considering the nature
of exploration business and availability of infrastructure available in the
country, it was decided to have freedom for the operator to sell the produced
gas in the domestic market driven price.
Any further restriction in NELP terms may be deterrent to the investment in the
states. Further, it should be noted that the offshore areas come under the
purview of the Central government. Putting conditions to restrict gas selling by
the operators in the state only, may switch the investment from on land areas to
offshore areas. Therefore, it is in the interest of both states and the Centre
to provide freedom to sell gas at market driven prices only.
Protests were raised even in case of other minerals like iron ore and coal.
Governments of Orissa, Jharkhand and Chhattisgarh are vehemently opposing their
mineral resources being exported to other states. Incidentally these are some of
the least developed states. Though blessed with rich natural resources these
states are lagging far behind other states like Gujarat and Maharashtra in terms
of growth. Indeed, the main reason for their protests is the regional imbalance
The government should give sincere thought to mitigate regional imbalance in
growth. Otherwise such protests may become frequent and uncontrollable.
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