RS Sharma, Former CMD of ONGC is of the clear view that in natural gas lies the big opportunity for the government to reduce its dependency on oil imports by shifting some of the oil consumption to gas consumption. The government has taken a proposal to the cabinet for the gas based economy – what all incentives need to be given, he said, adding that it should go to City Gas Distribution (CGD) because CGD will make India gas-based economy. He further said that if we want to make India a gas-based economy then the natural gas GST should be at par with coal. Coal gets 5 percent GST likewise gas should also be given only 5 percent.”
With eye on the budget 2020, the main challenge for the government is bring down oil imports that have been going up steadily. The Prime Minister in 2015 had said that they wanted to bring down oil import dependency by 10 percent, which stood at 78 percent by 2022 but actual import dependency has gone up to 83-84 percent. Consumption has been rising, while domestic production is stagnant and that is not a desirable situation. The government has to look for other ways and means to achieve that energy security, said Sharma in an interview with CNBC-TV18.
When asked about BPCL disinvestment, Sharma said, “I did not have hopes that it would be done in FY20 because BPCL is a mammoth organisation – if you look at the upstream, they have lot of assets overseas, their infrastructure is huge, they have 12,000 plus retail outlets, depots, refineries, etc., so valuation of that company itself is going to be a challenging task. So the time frame which the government thought they will be able to do was too less. So, divestment in FY21 is doable, he added.
Giving his take on the whole AGR matter he said, “Telling GAIL and Oil India – these companies to pay on AGR basis is a joke because these companies they are not into the business. They got into these licenses for their specific business needs. I believe, without any delay, the government should come out with clarification that these PSUs will be exempted from these payments and they will have to exempt.”
Talking about proposal to halve the cess on domestic crude oil, he said, if it comes through it would change the sentiment and help any new exploration, any new finds that come. “One must realise that in India, we are 18 percent of world population, the non-hydro carbon results in our country are less than 2 percent. So, the huge investment has to go into the exploration and exploration per se is not a revenue generating activity. I have been very categorically saying exempt all exploration activity from levy of service tax and GST because it is not a revenue-generating activity.”