BP criticizes govt over tax sops

Days before the government announces results of its seventh round of exploration acreage, BP (formerly British Petroleum) appears to have hit the nail on its head over why global biggies have stayed away from India so far. In a scathing letter to oil minister Murli Deora, the UK major's group managing director, Ian Conn, has charged the government with reneging on its commitment and said such policy flip-flops discourage investors from taking India seriously. The government is set to announce on Monday the winning bidders for the 57 acreages it had offered in the seventh round. But going by BP's letter, it looks that known global exploration giants will once again give India the miss. So far, big names such as Chevron or ExxonMobil have steadfastly kept away from bidding in the government rounds despite oil ministry's roadshows all over the world. Overseas explorers and their domestic counterparts alike have been piqued by the Budget move to limit tax concessions to companies that find crude. The government had been making commitment of giving tax concessions to companies that find oil or gas every time it auctioned acreages, including the latest round. But this year's Budget provisions make the concessions available to firms who find oil and leaves out those who strike gas. To make matters worse, the move is to be applied with retrospective effect. Ironically, concessions are available to firms that find gas under a separate acreage auction for tapping gas trapped between layers of coal. On the surface, the problem looks simple and needs expanding the definition of ‘mineral oil' in tax norms. The relevant section under which companies seek tax relief just says "mineral oil" and does not describe or mention "gas" as a product of successful exploration. With present technology, companies cannot say whether they will strike gas or oil if at all before they start drilling. Many times fields throw up both gas and oil at the same time. – www.economictimes.indiatimes.com