A.

Policy Framework for Streamlining the Working of PSCs in respect of Pre-NELP and NELP
Blocks

The Government of India hereby notifies the “Policy Framework for Streamlining the Working of
Production Sharing Contracts in respect of Pre-NELP and NELP Blocks” as hereunder.

1. In Pre-NELP Exploration Blocks sharing of Royalty and Cess in proportion to Participating Interest
of the Contractors and to be cost recoverable.
• In Pre-NELP Exploration Blocks NOCs, as Licensee are liable for payment of royalty, cess and
other statutory charges on entire production of oil and gas.
• To facilitate further investments, the GoI has decided that the Contractors will be allowed to
share the liability of statutory levies (royalty, cess and any other charges) in proportion to
their respective Participating Interests (PIs) in the block.
• All the constituents of the Contractor will become Licensee of the Block and
• Payments made towards such statutory levies shall be eligible for cost recovery as part of
contract cost prospectively.

2. Extended Exploration Period in NER

The Contractors in NER will be given following special dispensations:

2.1 Additional Extension of Exploration/Appraisal Period :

In all operational Pre NELP and NELP Blocks, Contractors may be allowed, upon their
request, a maximum extension of
a. 2 years in exploration period
(which can be availed either in whole during a single phase or in parts during
different phases) and
b. 1 year in the appraisal period.
This additional extension shall be over and above the extensions permissible under the
extant extension policy related to Pre-NELP and NELP.

2.2. Marketing including Pricing Freedom of Natural Gas :

Contractors would be provided marketing including pricing freedom for the gas to be produced from
discoveries in NER, subject to the following conditions:
It will be applicable to future discoveries as well as existing discoveries which are yet to commence
commercial production as on 1st July 2018.
The Contractors in the North Eastern Region (NER) will be given the following special dispensations:

3. Force Majeure –
Extension of Notice Period from 7 days to 15 days
It has been decided to extend the time limit for giving written notification to
H/Management Committee about the occurrence of Force Majeure event from 7 days to 15
days in Pre-NELP and NELP contracts in operational blocks. This dispensation shall be
applicable prospectively.

4. Extending Tax benefits under Section 42 of Income Tax Act, 1961 to Pre- NELP discovered
fields during extended period under the Policy for Pre- NELP PSC Extension dated 28.03.2016

It has been decided to extend the tax benefits under Section 42 of the income Tax Act. 1961 to 11
Pre-NELP Discovered Fields during the extended period of the Contract under the Policy for PSC
extension dated 28th March, 2016.
B. POLICY FOR EXTENSION OF EXPLORATION PHASES UNDER NELP & PRE-NELP PSCs

• GoI has signed over 100 PSCs, which are currently valid and are at various stages of
exploration.
• PSCs have been signed within framework of NELP and Exploration Policy adopted prior to
NELP.
• These contracts generally provided extension in exploration phases for a period of 6 months
to complete the unfinished Minimum Work Programme and also provided 6 months
extension to complete a well under drilling.
• In the last few years, it was observed that a number of proposals seeking extension in
exploration phases were received by the Government citing numerous reasons.
• The Government have been considering the cases on merit of individual proposals.

In order to adopt transparent and consistent framework for granting extension in exploration
phases Government has framed an extension policy.
The broad objective of the extension policy are as under :
1. To have a transparent and consistent set of criteria to take decisions on extension proposals
of the contractors.
2. To act as deterrent for those operators seeking unnecessary extensions or holding on the
acreages without doing any exploration activities or activity at slow pace.
3. The policy envisages a system of progressive penalty by way of increasing bank guarantee
amount and/or cash payment as agreed pre-estimated liquidated damages (mutually agreed
pre-estimated amount of liquidated damages) vis-a-vis duration of extension sought and
giving due recognition to the companies who have made discoveries and have understood
the geology of the block apart from encouragement to additional exploration programme.
4. Upto 6 months extension may be given by the Management Committee or the Government
on merit in terms of the provisions of the respective PSCs.
5. Demonstrable delays on account of getting the Government approvals / permits / clearances
will be counted as excusable delays.
6. In case, the contractor does not fulfill the work programme within the stipulated period or
extended period, as may be the case, shall be required to pay money for the unfinished work
programme, if any, to the Government in terms of the respective provisions of the PSC.
C. Policy framework for Streamlining operations, Relaxation of timelines and Delegation of
powers to DG-DGH under PSCs (Aug 2018)

To streamline the operations under PSCs, following policy guidelines have been approved by GOI:
1. Allow entry to next exploration phase pending resolution on amount payable for Unfinished
Minimum Work Program (MWP) against submission of Bank Guarantee for differential
amount in operational blocks.
• In PSCs, Contractor has to compute and pay the amount of unfinished MWP within 60
days of expiry of exploration phase.
• Further, as per the policy dated 10th November, 2014, Contractor can enter into next
exploration phase by paying cost of unfinished MWP of the previous phase.
• To expedite the exploration activities, in case of disagreement on the cost of unfinished
MWP, and pending resolution of such disagreement, it has been decided that the
Contractor would be allowed to enter into subsequent exploration phase.
2. Grant of area extending beyond contract area for appraisal prior to Development Area
PSCs contain provisions of enlargement of Development Area in case commercial discovery
extends beyond Contract Area.
It has been decided to allow the Contractor to carry out appraisal activities and grant PEL in
the adjacent area outside the Contract Area to ascertain the extent of the commercial
discovery and area thereof provided such area
 Is not of strategic importance, or
 Has not been awarded to any other company by the Government, or
 Is not held by any other party, or
 Is not on offer by Government, and
No application for a license or lease or Expression of Interest in HELP is pending with the
Government
3. Delegating power to DG, DGH under PSCs
i. Empowering DG, DGH for approval of Excusable Delays under the Policy for Extension in
Exploration Phase (dated 18.04.2006).
• Government issued the policy dated 18.04.2006 which states that demonstrable delays on
account of getting government approvals/permits/clearances will be counted as excusable
delays.
• Excusable delays are approved by Government.
• To expedite the approval process, it has now been decided to delegate the power to DG,
DGH to approve cases of demonstrable delays.
 D. Policy for the Grant of Extension to the PSCs Signed by Governments awarding small,
medium sized and discovered fields to private Joint Ventures

 GoI has approved a policy for granting extension to small and medium sized discovered field
in order to have a transparent and defined framework for granting extension.

 It will help the operators and investors in planning their investments in these fields which
will help in optimal exploitation of discovered hydrocarbons from these fields.

1. Submission of request for extension of contract:

• The contractor should submit the application duly approved by the Operating Committee for
extension of contract to MoPNG at least 2 yrs in advance of the expiry date of contract, but,
not more than 6 years in advance, with a copy to DGH.

• DGH will make a recommendation to MoPNG within 6 months of submission of application

by the contractor.

• GoI will take a decision on the request for extension within 3 months of the receipt of the
proposal from DGH.

2. Fiscal Parameters for Extension:

2.1 Government Share:

Govt. Share of Profit Petroleum during the extended period of contact shall be 10% higher for
small and medium sized discovered fields than the share as calculated using normal PSC
provisions.

2.2 Royalty and Cess:

During the extended period of contract, the royalty and cess shall be payable at prevailing rates
(of nomination regime) and not at concessional rates as stipulated in PSC for both small and
medium sized fields.

E. Policy for Determination of Cost of Unfinished MWP under Pre-NELP & NELP Contracts
 GoI has signed several PSCs drung pre-NELP and NELP rounds.
 PSCs provide a commitment on the part of contractor to carry out MWP, as specified in
various exploration phases.
 Work Program bid by the companies is stipulated as committed work program in each of the
exploration phases of respective PSCs.
 Duration of each of the exploration phases is provided in the PSCs.
 PSCs generally have an extension clause which provides an extension of exploration phase by
6 months to complete MWP.
 Contractors have been seeking extension in exploration phases beyond the timelines
specified in the PSCs which are governed by the extension policy approved by the
government
 In case the contractor do not fulfil the MWP/ committed work program within stipulated
period, they are required to pay money for the unfinished MWP, if any, to the government.
 It has been observed that few contractors have relinquished Blocks by depositing the money
towards the un-finished work programme with the government.
 Amount has been calculated and paid by the contractor based on certain assumptions.
 Assumptions are vulnerable to different interpretations as per PSC provisions.
  Transparent and consistent policy has been framed for determination of amounts towards
unfinished WP in line with the PSC provisions.
 The policy envisages that the amount determined should be such
− so as not to penalize the contractor and
− it must act as a deterrent for contractors
in order to ensure that they complete minimum work commitments.

With above objectives the policy has been framed which will be followed by contractor
parties while determining the amount of unfinished work programme and depositing the
same with the government.
• Cost of unfinished Work Programme for an exploratory well will be determined on dry
well principle.
• Well depth committed under MWP will be considered for purpose of computing cost of
unfinished well as this has been the criterion for evaluating the bids and award of the
blocks.
• Well days will be calculated by computing the no of days required for drilling. GTO of
the well will be considered for estimation of drilling time.
• Well design for unfinished well will be similar to the wells in the same block
• In case no well has been drilled in same block then well in neighbouring block will be
considered.
• Day rates will considered from the valid running contracts for rigs, services and
consumables.
• Cost of each unfinished work program will be computed as per format given in model
PSC.
• 2D and 3D seismic costs will be computed based on prevailing rates
• Competent authority to approve the final amount toward unfinished work programme will
be based on the proposal received from DGH.
• In Blocks, where provisional payments have already been made by the contractor to the
government, the amount for unfinished work programme will be calculated and finalized in
accordance with this policy and contractors will make balance payment to government
within 15 days from notification of amount so determined.
• Any consequential issue arising out of the implementation of this policy will be decided by
the MoPNG.
F. Policy for Extension of Exploration Phase for Exploration under CBM Contracts (2007)

− GoI has signed 26 contracts for exploration and production of coal bed methane under three
rounds of CBM which are currently under various stages of exploration.

− These have been signed within the framework of CBM Policy and generally provide 6 months
extension in each of exploration phases I& II to complete the unfinished MWP.

− The objective of the CBM policy has been to stimulate exploration and production of coal
bed methane in the country.

In the past, a number of proposals seeking extension in the exploration phases have been
received by the Government from contractor citing numerous reasons.

Reasons for seeking extension in Exploration Phases are:

i. Delays in getting environmental clearance from Government authorities.

ii. Procedural delays in acquisition of land

iii. Law and order problems in the State

 iv. Delays because of non availability of suitable deep core hole drilling rigs in the market

v. Delays on account of Force Majeure conditions

In order to adopt a transparent and consistent framework for granting extension in exploration
phases, the Government in line with the existing policy of extension under NELP contracts, has
framed an extension policy for considering proposals seeking extension in exploration phases
under CBM contracts.

Objective of the extension policy:

• To maintain the integrity of bidding process.

• To grant reasonable extension of time so as to enable contractors to complete MWP or

additional exploration work programme.

• Not to delay execution of development plan or production or life cycle of the entire project
and payment of Royalty, taxes and contractual payments.

• To act as deterrent for seeking unnecessary extension or holding on acreages without doing
any or little exploration activities or activity at slow pace.

• The policy envisages a system of penalty by way of submission of bank guarantee and pre-
estimated agreed Liquidated damages (in some cases/ situations) in lieu of un-finished or
additional work programme.

• Demonstrable delays on account of getting Government approvals /permits / clearances will

be counted as excusable delays and such delays shall be condoned.

• In case, the contractor does not fulfill the work programme within the stipulated period or
extended period, as may be the case, he shall be required to pay money for the unfinished
work programme, if any, to the Government in terms of the respective provisions of the
contracts.

G. Policy for Early Monetization of Coal Bed Methane (CBM)- 2017

1. Marketing and Pricing Freedom

To provide marketing and pricing freedom to the Contractors to sell the CBM at Arm’s
Length Price in the domestic market.

2. Contractual Issues

DG,DGH is empowered for condoning the delays in notice periods, annual work program and
budgets and to approve the excusable delays regarding clearances from State and Central
Government.

DGH is empowered to

 Condon delays in submission of Annual Work Program and Budget

 Condone delays up to a period of 90 days for submission of Annual Work Program &
Budget.

 Approve the excusable delays, due to Land Acquisition / Force Majeure condition or any
other such matter beyond the control of Operator
  Reduce MWP in proportion to the contract area if contract area is reduced by
Government for any reason. If the Contractor decides not to accept any reduction in
contract area, the Contractor would be permitted to exercise exit option from the
contract without payment of Cost of Unfinished Work Programme.

 If delay in grant of PEL exceeds 2 years from the State Governments in any Block, the
Contractor if exercises exit option from the CBM Block, will be permitted to exit without
paying cost of unfinished work program.

 In cases of inordinate delays in granting clearances i.e. beyond two years in any block,
the Contractor if exercises is exit option, will be permitted to exit from the contract
without paying Cost of Unfinished Work Programme.

 In case of low prospectivity observed in CBM block after drilling of core holes, then it is
not required to drill test/pilot wells in the block. In such cases, DGH is authorized to
waive off the cost of test/pilot wells depending upon technical requirement

H. Policy Framework for exploration and exploitation of Unconventional

hydrocarbons under existing PSCs, CBM Contracts and Nomination Fields (2018)
− Policy guidelines of 20th August, 2018 for exploration and exploitation of unconventional
hydrocarbon under existing PSCs, CBM contracts and Nomination Fields

− Permit exploration and exploitation of unconventional hydrocarbons, including shale oil and
gas and CBM in existing acreages under Pre-NELP and NELP PSCs.

− Government has decided to permit exploration and exploitation of all types of hydrocarbons
including shale oil/gas in the existing CBM contracts.
I. Categorization of Sedimentary Basins and other reforms (2019)
Sedimentary Basins of India are classified into the 3 categories:

− Category-I: which have proven hydrocarbon resources with established commercial

production.

− Category-II: which have contingent resources which are yet to be converted to

recoverable reserves and commercial production.

− Category–III: which have prospective resources with no hydrocarbon discovery and few
exploration inputs and data

Increasing Exploration in Unexplored/Unallocated Areas:

Unexplored areas will also include unallocated areas which have not been allocated to any
entity for exploration and production.

Following policies are to be applicable prospectively only to such areas to be allocated in

future:

2.1. Fiscal and Contractual Terms for areas in Category - I Basins

• Exploration blocks will be awarded on the basis of international competitive bids based
on exploration cum revenue sharing.

• For the purpose of revenue share, the bidders will quote the percentage of revenue to
be shared with the Government against Lower Revenue Point (LRP) and Higher Revenue
Point (HRP).

• LRP is equal to USD 0.05 million of revenue per day and HRP is equal to USD 7 million
revenue of per day.

• Revenue sharing ceiling at HRP will be set at 50%.

• Exploration blocks will be awarded on the basis of international competitive bids based
on exploration cum revenue sharing.

• For the purpose of revenue share, the bidders will quote the percentage of revenue to
be shared with the Government against Lower Revenue Point (LRP) and Higher Revenue
Point (HRP).

• For evaluation of bids, weightage will be as under:

a. Minimum Work Programme (MWP) – 70%

b. Revenue share being offered to the Government- 30%
• For evaluation of MWP, weightage will be as under:
a. Seismic survey - 20%
b. Number of Exploratory wells - 80%.
• Timelines for completion of MWP will be
 3 years for onland and shallow water blocks (up to 400 meters of water depth),
 4 years for Deep water (beyond 400 meters but up to 1500 meters of water depth) and
Ultra deep water blocks (beyond 1500 meters of water depth).
• There will be no bar on additional exploration work and activities beyond MWP.
• All other provisions will be similar to that of existing HELP.
 2.2. Fiscal and Contractual Terms for areas in Category-II and Category-III Basins

• Exploration blocks will be awarded on the basis of international competitive bids based
exclusively on exploration work programme. (Cat -1: exploration cum revenue sharing)

• Statutory levies including royalty will be paid by the Contractor.

• No revenue or production sharing with Government except in case of a windfall gain.

A Windfall gain accrues to the Contractor when revenue net of royalty from the contract
area exceeds USD 2.5 billion in a financial year.

2.3. Other Contractual Terms

• Royalty rates as applicable under HELP will apply.

• To expedite production, concessional royalty rates will be applicable if production is

commenced within four years for onland and shallow water blocks, and five years for
deep water and Ultra deep water blocks from the effective date of contract. Royalty rates
and basin category wise concessional royalty rates are at Annexure-II.

• In case commercial production is not commenced in the above prescribed time period,
then royalty at existing rates will be applicable.

• Royalty rates as applicable under HELP will apply.

• To expedite production, concessional royalty rates will be applicable if production is

commenced within 4 years (onland and shallow water blocks), and 5 years (deep water
and Ultra deep water blocks) from the effective date of contract.

• In case commercial production is not commenced in the above prescribed time period,
then royalty at existing rates will be applicable.

• Contractor will have full marketing and pricing freedom to sell on arm’s length basis.

• No exports will be allowed.

• The Contractor will have freedom to transfer/exit the block provided work programme
has been adhered to. However, a suitable penalty mechanism will be devised for non-
completion of work programme.

• There will be adequate flexibility to revise the FDP with the concurrence of DGH.
J. Policy framework to promote and incentivize Enhanced Recovery methods for oil
and gas (Oct., 2018)
• Policy will apply to all oil and gas fields across all contractual regimes and Nomination
acreages with NOCs.

• Policy will be effective for a period of ten years from the date of notification in the gazette.

• Fiscal incentive will be available for a period of 120 months from the date of commercial
production in ER/UHC projects, and from the date of achievement of the prescribed
benchmark of recovery rate for Improved Recovery (IR) projects.

• Policy envisages assessment of all fields for ER potential.

• Fiscal incentives will be provided during commercial production of the ER project on the
incremental production.

• Fiscal incentive will be available on entire production beyond the benchmark for IR projects .

• In case of UHC projects, entire production will be eligible for incentives.

K. Site Restoration and abandonment guidelines (2017)

• Abandonment Plan will be submitted to OISD (for offshore production sites only)/ DGMS (for
onshore production sites only).

• Regulations for decommissioning of offshore production sites shall be administered by OISD

while DGMS shall administer decommissioning of onshore production sites.

• Site Restoration Guidelines for Petroleum Operations are applicable only for field
abandonment upon cessation of production from producing fields only.

• Contractor shall submit third party audit report on the contractor’s work completion dossier
to OISD/DGMS and DGH which shall be considered as certification of completion of site
restoration/ decommissioning/ abandonment work.

Site Restoration Fund (SRF)

SRF is governed by relevant provisions of the PSCs and Site Restoration Fund Scheme SRFS of
1999. Following guidelines are made:

• Contractor will open SRF account immediately after 1st commercial production.

• In case of new fields, Contractor can alternatively submit BG for initial period up to 3 years
after first commercial production. The Contractor shall create SRF account for the
subsequent years of PSC period.

• In case of existing fields with commercial production, where SRF is not yet established,
Contractor can alternatively submit BG within 6 months after policy guidelines notification
for a period up to 3 years. Contractor shall create SRF account for subsequent years of PSC.

• Amount of SRF or BG will be in accordance with decommissioning estimates as proposed by

Contractor and approved by MC.

• Due to varying operating lives of individual assets and changes in resource costs,
decommissioning and site restoration costs may be evaluated and updated every 3 years.
 Decommissioning cost estimate, duly assessed by a qualified independent third party, will be
submitted by Contractor to DGH. revised estimates will become basis for amount in SRF or
BG.

L. Amendment of Guidelines on Site Restoration and Abandonment Offshore and Onshore

Oil and Gas Production Sites (August, 2021)

GoI makes following amendments to its Notification of May, 2018 relating to Guidelines on
Site Restoration and Abandonment of Offshore and Onshore Oil and Gas Production Sites.

Regarding Site Restoration Fund, following guidelines are made:

• Contractor will open SRF account immediately after 1st commercial production.

• In case of new fields, Contractor can alternatively submit Bank Guarantee (BG) for the
initial period up to 3 years after 1st commercial production. The Contractor shall create SRF
account for subsequent years of PSC period.

• In case of existing fields with commercial production, where SRF is not yet established, the
Contractor can alternatively submit Bank Guarantee within 6 months after policy guidelines
notification for a period up to 3 years. The Contractor shall create SRF account for the
subsequent years of PSC.

(same as previous guidelines)

• In 4th year: In case of new fields as well as existing fields with commercial production,
contractor or operator may alternatively submit bank guarantee for a value up to 75% of
cumulative amount required to be deposited in the SRF account and deposit remaining
balance amount in the SRF account.

• In the 5th year: Contractor or operator may alternatively submit bank guarantee for a value
up to 50% of cumulative amount required to be deposited in SRF account and deposit
remaining balance amount in SRF account.

• Thereafter, contractor or operator shall continue to deposit and maintain funds in such
manner that not more than 50% of cumulative amount required to be deposited in
relevant year in SRF Account is maintained in form of bank guarantee.

• The Amount of SRF or BG will be in accordance with decommissioning estimates as

proposed by Contractor and approved by Management Committee.

• Funding in SRF account or BG amount will be calculated using Unit of Production method
i.e. Reserve of the field to Production ratio.
M. Petroleum and Natural Gas Regulatory Board (PNGRB)
THE PETROLEUM AND NATURAL GAS REGULATORY BOARD ACT, 2006 NO. 19 OF 2006

PNGRB Act :-

An Act to provide for the establishment of PNGRB to regulate the refining, processing, storage,
transportation, distribution, marketing and sale of petroleum, petroleum products and natural gas
(MS & DS) excluding production of crude oil and natural gas (US) so as to protect the interests of
consumers and entities engaged in specified activities relating to petroleum, petroleum products and
natural gas and to ensure uninterrupted and adequate supply of petroleum, petroleum products and
natural gas in all parts of the country and to promote competitive markets and for matters
connected therewith or incidental thereto.

• PNGRB Constituted under The Petroleum and Natural Gas Regulatory Board Act, 2006.

• Board has also been mandated to regulate the refining, processing, storage, transportation,
distribution, marketing and sale of petroleum, petroleum products and natural gas excluding
production of crude oil and natural gas so as and to ensure uninterrupted and adequate
supply of petroleum, petroleum products and natural gas in all parts of the country.

PNGRB’s current focus areas:

• Increase share of NG in India’s energy basket.

• Creation of infrastructure to support higher consumption of NG in India

• Establish a transparent and vibrant NG market in India.

• Balance interests of consumers, transporters and producers of NG.

A. Notified Regulations: City or Local Natural Gas Distribution Network

1. Authorizing Entities to Lay, Build, Operate or Expand City or Local Natural Gas Distribution
Networks

2. Determination of Transportation Rate for CGD and Transportation Rate for CNG

3. Exclusivity for City or Local Natural Gas Distribution Network

4. Technical Standards and Specifications including Safety Standards for City or Local Natural
Gas Distribution Networks

5. Code of Practice for Quality of Service for City or Local Natural Gas Distribution Networks

6. Access Code for City or Local Natural Gas Distribution Networks

7. Integrity Management System for City or Local Natural Gas Distribution Networks

8. Determining Capacity of City or Local Natural Gas Distribution Network

9. Guiding Principles for Declaring City or Local Natural Gas Distribution Networks as Common
Carrier or Contract Carrier
B. Notified Regulations: Natural Gas Pipelines

1. Authorizing Entities to Lay, Build, Operate or Expand Natural Gas Pipelines

2. Code of Conduct for Entities Engaged in Marketing of Natural Gas and Laying, Building,
Operating, or Expanding Natural Gas Pipeline

3. Access Code for Common Carrier or Contract Carrier Natural Gas Pipelines

4. Determination of Natural Gas Pipeline Tariff

5. Guiding Principles for Declaring or Authorizing Natural Gas Pipeline as Common

Carrier or Contract Carrier

6. Technical Standards and Specifications including Safety Standards for Natural Gas
Pipelines

7. Determining Capacity of Petroleum, Petroleum Products and Natural Gas Pipeline

8. Integrity Management System for Natural Gas Pipelines

C. Notified Regulations: Petroleum and Petroleum Products Pipelines

1. Authorizing Entities to Lay, Build, Operate or Expand Petroleum and Petroleum
Products Pipelines
2. Determination of Petroleum and Petroleum Products Pipeline Transportation Tariff
3. Guiding Principles for Declaring or Authorizing Petroleum and Petroleum Products
Pipelines as Common Carrier or Contract Carrier
4. Technical Standards and Specifications including Safety Standards for Petroleum and
Petroleum Products Pipelines
5. Access Code for Common Carrier or Contract Carrier Petroleum and Petroleum
Products Pipelines
6. Integrity Management System for Petroleum and Petroleum Products Pipelines

D. Notified Regulations: Development of Technical Standards and Specifications

1. Procedure for Development of Technical Standards and Specifications including Safety
Standards
2. Codes of Practices for Emergency Response and Disaster Management Plan
3. Third Party Conformity Assessment
4. Technical Standards and Specifications including Safety Standards for Liquefied
Natural Gas Facilities
5. Technical Standards and Specifications including Safety Standards for Retail Outlets
dispensing Petroleum, Auto LPG and CNG
6. Technical Standards and Specifications including Safety, Safety Standards for LPG
Storage, Handling and Bottling Facilities
7. Technical Standards and Specifications including Safety Standards for Petroleum
Installations
N. Policy for Development of natural gas pipelines and City or local natural gas distribution
network (December, 2006)

1. OBJECTIVE

1.1

• Regulatory reforms encourage market forces to enhance competition and produce

competitive and efficient industry structure.
• Competition can reduce the need for regulation. In many cases there is some monopoly
where benefits of regulation potentially outweigh the cost.
• Natural gas pipelines infrastructure and city or local natural gas distribution networks fall
under this category.

1.2

• The natural gas sector is at threshold of rapid growth in the country.

• With increased exploration efforts, commissioning of LNG import terminals, projected
upcoming LNG terminals and Government’s initiatives for transnational pipelines, there is
need of policy framework for future growth of pipeline infrastructure to facilitate
evolvement of nation-wide gas grid and growth of city or local gas distribution networks.

1.3 The objective of policy is

 To promote investment from public as well as private sector in natural gas pipelines and city
or local natural gas distribution networks.
 To facilitate open access for all players to pipeline network on a non-discriminatory basis.
 To promote competition among entities thereby avoiding any abuse of the dominant
position by any entity.
 To secure consumer interest in terms of gas availability.
 To secure Reasonable tariff for natural gas pipelines and city or local natural gas distribution
networks.

O. Policy regarding running of the ROs for which sites have been taken over and
facilities installed on COCO basis

Reference: Ministry’s letter dated 4th Oct 1999 on the above subject and the question of
continuance of the guidelines contained in that letter, in the post-APM regime has been
considered by the government.
In order to provide commercial freedom to Oil Marketing Companies (OMCs) in public
sector, it has been decided in suppression of that letter that OMC shall with immediate
effect, formulate their own policy and procedures for operating those retail outlets where
sites have been procured and facilities created, or which have been decommissioned
because of termination of dealerships on COCO/ ad hoc basis till regular dealers are
appointed.
It will be for OMCs to decide whether they will adopt a joint and mutually agreed procedure
or an independent procedure which will suit them individually.
In any case, OMCs shall ensure that:
 - Efforts are made to appoint regular dealers to such ROs as early as per dealership
guidelines.
- Procedure adopted should be such that whenever the occasions for transfer of retail
outlet to regular dealer arrives, the transfer takes place smoothly and without any
hurdles.

P. Policy guidelines on re-constitution, resitement, revival of dealerships / distributorships

• Reconstitution
In cases where original signatory retains majority share and proposes induction of a partner
of his choice. OMCs should evolve a transparent procedure to evaluate the incoming
partner’s eligibility, in line with the present selection policy for dealerships/ distributorships.
Upon the candidate satisfying the criteria, the partner may be inducted and in cases he does
not fulfil the criteria, he may be rejected.
If the original partner resigns/retires from the dealership, the dealership may be terminated
unless it is within the family, and fresh selection held.
In cases of all reserved categories, reconstitution can be done with the incoming partner
belonging to the same category and the majority holding must remain with the original
allotter after reconstitution. In other words, the incoming partner should hold only a
minority share.

• Resitement
Emphasis should be to reach out to the remote/ low service areas. Planning should be there
to serve the high, middle and low density areas.

• Revival
No revival in respect of termination on account of malpractices/irregularities.
No objection in respect of other cases.

Q. Policy regarding handing over of COCO outlets to the LOI holders

Reference: Indian Oil Corporation Limited on the subject and policy formulated by IOCL on Industry
basis has been examined by the ministry.

After consideration of the policy framed on the industry basis, it is advised that following criteria
may be adopted/ followed by Oil Marketing Companies (OMCs) with regard to handing over of
Company-Owned-Company-Operated (COCO) Retail Outlet Holders:

• COCO i.e. Jubilee Retail Outlets (JROs)/ permanent COCOs will not be handed over to LOI-
Holders, and in cases at any stage, OMCs decade to run these on dealership basis, regular
selection of dealers will be made in accordance with the guidelines.
• COCOs located at “A” site Marketing Plan locations, will be handed over to dealers who have
been formally selected for these locations in accordance with the guidelines.
• Those COCOs, where land owners or their nominees are appointed labour contractors, may
not be directly handed over to land owners/their nominees. But, selection of regular dealers
may be carried out as per selection guidelines.
• In case of other COCOs, only LOI-Holders under the Special Scheme (Operation Vijay Kargil)
OVSS and those under discretionary quota may be considered for award of COCO
dealerships. The priority for OVSS will be as per the recommendation of the Directorate
General of Resettlement (DGR), Ministry of Defence.
R. De-leasing policy to be followed by OMCs in respect of RO sites -April 2010

Ministry approved De-leasing policy for RO Sites relating to de-leasing of land by public
sector Oil Marketing Companies (OMCs).

1. Policy for Strategic Sites

Definition of Strategic Sites:

i. Sites which are Located in Metro Cities/ State Capitals/ Major Urban Centres/ Small Towns
where getting an alternate site would be difficult/commercially unviable.
ii. Sites which have been allotted as dealership under SC/ST category and other categories,
which are availing of Corpus Fund facilities
 OMCs should identify sites as “Strategic sites” at regular intervals of time.
 Identification of sites should be done in a transparent manner by laying down appropriate
procedures.

Strategic site should be specific in nature and emphasis would be to secure such sites
through long leases/purchase by negotiating terms up to level of market rental/market
value of property so long as same is commercially viable.

1.1. Where lease is valid

Proposal for vacation of site or provide higher rental/purchase up to market value may
not be considered by OMCs and if need arises, OMCs should defend Court cases in this
context.
1.2. Where lease has expired but renewal option is available
Oil Companies will exercise their contractual rights and defend court cases filed by
landlords.
Industry may also consider higher rentals based on commercial reasons from present
levels going up to fair market rentals based on negotiations. These negotiations may
start even before the expiry of lease.
1.3. Where lease has expired and renewal option is also not available
OMCS should explore possibility for negotiated settlement for renewable of lease/
purchase on strength of tenancy protection wherever available.
Where tenancy protection is not available, OMCs should make every effort to secure the
site based on negotiated settlement for lease or purchase at market rates.
In the event of negotiations failing, OMCs should explore available legal options

2. Policy for Non-strategic sites

(other than strategic sites)
In case of non-strategic RO sites, the policy will be to secure the site at commercially
viable terms, failing which industry may favourably consider vacation/de-leasing the site.
2.1 . Where lease is valid
Industry shall not consider these sites for de-leasing except where sites are commercially
unviable
2.2. Where lease has expired but renewable option is available
 OMCs should exercise available option for renewal under lease agreement unless site is
commercially unviable.
  Industry may also consider higher rentals based on commercial reasons from present levels
going up to fair market rentals based on negotiations. These negotiations may start before
expiry of lease.
2.3. Where lease has expired and renewal option is also not available.
Industry should no objection to vacate/de-lease the premises.

3. Policy for Mumbai, Bangalore, Hyderabad and other cities with similar problems

3.1. Oil companies may negotiate higher rentals/purchase options up to market rates.

3.2. - Industry would negotiate with landlords for providing alternative site by them, in lieu
of the site to be vacated.

- OMCs should also consider monetary compensation if necessary, as well as other

commercial options.

3.3. If the negotiation fails, the industry may approach State Government for acquisition of
such sites. State Level Coordinators will anchor this activity for the industry in their interface
with the respective State Governments for the acquisition of the sites on Industry basis.

4. Policy for leases under Burmah Shell/ Esso Acquisition Act

For all Acquisition Act cases, industry may offer fair market rentals to landlords as per
guidelines prevailing. The OMCs may offer fair rentals or purchases at market value even
during renewal period.

5. Policy for cases pending in courts

While defending these cases in court, OMCs should also make efforts for out of
court settlement within guidelines framed for strategic and non-strategic sites.

6. Approvals of proposals for vacation/de-leasing of site

Would be approved by Boards/ Sub Committee of Boards or such other authority to

which Board has delegated power, in a time bound manner.

S. Amendments to the National Policy on Biofuels -2018

 National Policy on Biofuels – 2018
 Notified by MoPNG on 04.06.2018 in supersession of National Policy on Biofuels,
promulgated through MNRE, in 2009.
Amendments are done to National Policy on Biofuels due to
 Advancements in field of Biofuels.
 Various decisions taken in the National Biofuel Coordination Committee (NBCC) meetings to
increase biofuel production.
 Recommendation of Standing Committee. and
 Decision to advance introduction of Ethanol Blended Petrol with up to 20% ethanol
throughout the country from 01.04.2023,.
Following are the main amendments approved to the National Policy on Biofuels:

To

 Allow more feedstock for production of biofuels.

 Advance ethanol blending target of 20% blending of ethanol in petrol to Ethanol Supply
Year (ESY) 2025-26 from 2030.

 Promote production of biofuels in the country, under Make in India program, by units
located in Special Economic Zones (SEZ)/ Export Oriented Units (EoUs).

 Grant permission for export of biofuels in specific cases.

 Delete/amend certain phrases in the Policy in line with decisions taken during the meetings
of National Biofuel Coordination Committee.

 Add new members to the NBCC.

This will

• Attract and foster developments of indigenous technologies which will pave the way for
Make in India drive thereby

i. Generate more employment

ii. Leading to reduction in import of petroleum products by generation of more and more
biofuels.

• Promote Atmanirbhar Bharat and give an impetus to Prime Minister’s vision of India
becoming 'energy independent' by 2047; since many more feedstock are being allowed for
production of biofuels.