Cabinet Committee on Investment to take up fast tracking of clearances for $13.5 billion investment stuck in oil and gas sector

The newly constituted Cabinet Committee on Investment (CCI) under Prime Minister Manmohan Singh is likely to take up next week the long-pending issue of failure to give clearance and issuing no objection certificates to nearly 46 oil and gas blocks by the Defence Ministry and the Department of Space — leading to an estimated $13.5 billion investment being stuck.

The Petroleum Ministry has moved the CCI for taking up the case for granting clearance to these blocks which are facing hurdles due to issues including security considerations and strong objection by the Defence Ministry and the Department of Space.

The decision to move the CCI was taken after both the Defence Ministry and the Petroleum Ministry, despite the intervention of the Prime Minister’s Office (PMO), failed to resolve the contentious issues pertaining to these oil and gas blocks. For instance, the Defence Ministry has declined permission for drilling or any related activity in 14 oil and gas blocks and has given conditional clearances for 32 blocks.

The Petroleum Ministry has pleaded, in its note to the CCI, that India’s credibility on policy could face international embarrassment if clearances are not given and it could result in international investor deserting the oil sector. In a number of cases, the Defence Ministry, especially the Navy, has revoked clearances, after having them granted in the first place.

The Petroleum Ministry had last year warned the PMO that unless proactive efforts are made to fasten the process of pending clearances for oil and gas blocks, the country could witness an ‘exodus’ of foreign companies and billions of dollars of investments. “Foreign oil and gas giants were lured to India with a promise of conducive investment environment. Non-clearance would adversely effect investment environment for the future. Non-clearance at later stages, as has happened in many cases, could lead to litigation and claims for damages,” the Ministry had told the PMO.

Initially, there were a total of 74 oil and gas blocks which had clearance issues. After a series of meetings, 28 blocks have been cleared by the Ministry of Defence while 46 blocks are still awaiting clearances.

Out of the blocks pending clearances with the Ministry of Defence, seven each are pending with the DRDO and the Indian Air Force, 17 with the Navy, three with the DRDO and the IAF, one with the Navy and the IAF and four with the DRDO, the Navy and the IAF.

These blocks are spread over KG basin, Mumbai Basin, Gujarat-Saurashtra, Mahanadi basin, Andaman Basin and Cauvery Basin.

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