Petroleum and Natural Gas Ministry, concerned over the deteriorating health of the oil marketing companies (OMCs), has knocked at the door of the Finance Minister, Pranab Mukherjee seeking among other things permission to issue long term rupee bonds without security, issuance of infrastructure bonds, declaration of RLNG terminals as infrastructure industry and restoration of tax holiday for natural gas pipeline.
In its latest representation to the Finance Ministry before the general budget on March 16, the Petroleum Ministry has sent a set of financial proposals. Under these proposals the Ministry has sought that OMCs my be allowed to issue long term rupee bonds without security, subscription by banks of long term bonds issued by OMCs may be excluded from Single Borrower Limit of banks, long term foreign currency funds through syndicated loans and bonds be allowed; companies be allowed to issue ‘Infrastructure Bond’ subject to declaration of liquid pipeline industry as ‘infrastructure industry’ and RLNG terminals, an integral link for gas pipeline to transmit imported gas, may also be defined as infrastructure projects.
Furthermore, the Petroleum Ministry has proposed that the limit of automatic route under ECB guidelines for infrastructure sector may be enhanced and the Finance Ministry could extend Income tax-benefit for infrastructure projects under Sec 80 IA. In addition to this, the Ministry has sought separate guidelines for foreign currency loan under export credit agency guarantee including loan on reimbursement basis may be made; separate guidelines on Foreign Currency Loan for acquisition of foreign entity outside India; automatic Issue of tax free bonds up to Rs.1,000 crore per year for pipeline and RLNG related Infrastructure facilities by a company; restoration of Tax Holiday u/s 80 IA of the Income Tax Act for natural gas pipeline as allowed to other infrastructure industries like power sector, highways, telecom services.
The proposals also urged the Finance Ministry that natural gas should be considered as eligible goods for proposed Goods and Sales Tax regime, custom duty exemption for import of RLNG/ natural gas and capital goods for gas pipeline and “Declared Goods’’ status to natural gas and RLNG under the Central Sales Tax Act, 1956 and linking of VAT rate to rate of CST.