GoM headed By Finance Minister accepted most of suggestions of Chawla committee

The Group of Ministers (GoM) chaired by the Finance Minister Pranab Mukherjee accepted most of the suggestions made by the expert panel on allocation, pricing and utilization of natural resources, headed by Ashok Chawla, which has recommends a transparent and market based framework for allocation of natural resources. A ministry of finance official said that the most of the recommendations of the panel have been accepted.

Recently, the committee of secretaries had backed most of the recommendations made by the Chawla committee. The committee of secretaries was asked to give its view on the suggestion of Chawla committee, which may be taken up for the implementation.

The committee had recommended market based-determined price of natural gas, open acreage licensing policy for oil blocks, creation of a special purpose vehicle on the lines of ultra mega power projects with all embedded clearances, barring setting up of an upstream regulator for oil and de-reservation of forest land.

as per the committee’s recommendations the minerals which likely to found as surface deposits without making use of high technology, the state government ought to be incentivized and enabled to exploration so that adequately prospected ore bodies can be put to bid.

The committee also had recommended that the shale gas exploration policy be drafted only after assessing environmental impacts. The panel had advocated for complete transparency regarding chemicals used in the fracking of each shale gas wells.

Earlier in this year, the government had created a expert committee chaired by former finance secretary Ashok Chawla to recommend ways and means for distributing natural resources like minerals in a transparent manner. The sectors studied by the committee contain land, mining, coal, petroleum, natural gas, telecom, forests and water. The committee’s important suggestions include making bidding for mines and minerals more transparent, competitive and broad-based.  

Chawla committee had recommended that incidence and structure of royalty to be reviewed "through a transparent process" to represent a fair value for the mineral, since it is a primary source of revenue for the government.

The Chawla committee also advocates for open acreage licensing policy for allocation of oil gas bloacks in move which may bring exploration and production business environment on par with global standards. In the open acreage policy, an exploration company can express its interest in a block in any time as opposed to current system of periodic actions of blocks by the government.

once the application for a block has been received in the open acreage policy, it would be offered through the normal tender process as in the current New Exploration Licensing Policy ( NELP) where bids are invited via  an international competitive bidding system for exploration of hydrocarbons in the country including deep water areas.