Fiscal Regimes in Hydrocarbons Exploration and Production in India
By: Anupama Sen
In the mid nineties, India moved to a new contractual (production sharing) regime in the exploration and production of hydrocarbons (the New Exploration Licensing Policy or NELP), aimed towards the internationalisation of its supplier base, which prior to 1998 had remained almost entirely under public ownership and administration. It has been ten years since the first round of bidding for acreages under NELP (1999). Eight rounds of NELP have been concluded, with a total of 203 contracts signed, covering 48% of India’s sedimentary basin. However, the last round (NELP VIII) was perceived as relatively less successful, indicating that this fiscal regime may have failed to fully align the objectives of the government with those of producers. An important issue in this regard is the allocation of risks in the contractual framework, and whether the same can be efficiently re-allocated to preserve the balance of incentives in the contract. Related to this is the question of whether the incentive structure in itself is sufficient to ensure contractual obligations are fulfilled by all parties. A recent spate of price revisions further suggests a period of imminent policy change in the hydrocarbons sector. Given this context, this study will investigate the question of an optimal fiscal regime for hydrocarbons in India through a mix of theory and empirical methods in economics.
Categories / Country and Regional Studies, Energy Economics, Energy Policy