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Cabinet decisions: Boost to coal, oil and gas output; DA hiked by 3%

FE Bureau
Cabinet decisions: Boost to coal, oil and gas output; DA hiked by 3%

In a slew of decisions on Tuesday, the Cabinet sought to provide a boost to captive coal production in the wake of rising demand for the fuel that threatens to pressure the country s current account, approved a system for hydrocarbon exploration awards that gives higher weight to work programmes rather than revenue sharing and gave its go-ahead for a policy to more than quadruple the domestic electronics production to $400 billion by 2025.

The Cabinet also increased the dearness allowance by 3% to 12%, effective from January 1, 2019.

This move will benefit 1.1 crore central government employees and pensioners and cost the Centre some Rs 9,168 crore annually.

On the change in auction terms for oil and gas blocks, finance minister Arun Jaitley said, The first category to be auctioned is blocks that are already explored fields. During the bid evaluation, the weight criteria for bidding under this category was 50:50 between minimum work proposed (thereby higher production) and revenue shared with the government. This has now been revised to 70:30 with higher weight for minimum work programme.

As per Tuesday s decision, private companies can sell up to 25% of production from captive coal mines in the open market. The move comes at a time when higher power demand is driving up coal imports in spite of state-owned miner Coal India increasing its production levels. The decision is also seen to reignite interest of private players in coal mining.

The last two auction-tranches for the coal blocks, where 15 mines were offered, had to be cancelled as they could not even elicit three bidders to participate.

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The provision for allowing 25% sale in the open market was included in the tender terms for coal ministry’s latest bid-invitations for 19 captive mines. However, this could not be implemented due to objections raised by the finance ministry. The amendments were as per the recommendations of the high power expert committee formed under the chairmanship of former chief vigilance commissioner Pratyush Sinha.

Invoking an enabling provision in the Coal Mines Nationalisation Act, 1973, the CCEA had, in February 2018, allowed commercial coal mining by the private sector and outlined the auction methodology for the same. However, there has not been any significant development yet on this front.

Earlier, high-level panel headed by Niti Aayog vice-chairman Rajiv Kumar stated that unexplored (hydrocarbon-bearing) areas in Category II & III basins be bid out exclusively based on exploration work programme. This has also been approved. Two years ago, the NDA government had moved from the system where acreage for exploration of oil and gas was allocated to firms offering the largest work programmes to revenue sharing contracts, where the bidder offering to share the highest revenue with the government will be allocated the blocks. However, this has proved to be dampener.

The CCEA also approved the Kisan Urja Sashaktikaran Mission (KUSUM) scheme, which aims to set up 10,000 MW of grid-connected solar power plants on farm lands, install 17.5 lakh stand-alone solar pumps and connect 10 lakh existing agriculture pumps with solar power. The scheme would receive central financial support of `34,422 crore over a few years.

The KUSUM scheme would receive central financial support of `34,422 crore over a few years. In the first pilot phase, 1,000 MW of solar plants would be installed and one lakh existing pumps would be solarised under the scheme. Solar generation units would be installed in barren lands owned by farmers and state-owned discoms would buy power from these installations. The central government would pay 40 paise to discoms for every unit of power they buy for five years.

For buying the stand-alone solar pumps and solarising existing irrigation pumps, 30% subsidy would be provided by the central government, 30% by state and the remaining 40% would have to be arranged by the farmer. The name of the scheme would be changed in the coming days, finance minister Arun Jaitley said while announcing the cabinet approval.

The Cabinet also approved promulgating an ordinance for companies law amendments to plug gaps in corporate governance and enforcement framework as well as improve the ease of doing business.

To protect the savings of gullible investors, the Cabinet also approved an ordinance to give effect to the the Banning of Unregulated Deposit Schemes Bill, 2018, that has stringent provisions to clamp down on ponzi schemes, including imprisonment up to 10 years for wrongdoers and confiscation of assets of firms found to have accepted deposits without authorisation.

Among other decisions, the Cabinet approved construction of Delhi-Ghaziabad-Meerut Regional Rapid Transit System at a cost of `30,274 crore over six years.