Petroleum Ministry extend the deadline for seeking comments on MRSC

Model Revenue Sharing Contract (MRSC), which will replace the current practice of companies getting blocks by bidding maximum work programme and then recovering all of their investment before sharing profits with the Government, has been delayed further with the Petroleum Ministry once again extending the deadline for seeking comments on a simpler revenue sharing contract, which it wants to replace the present Production Sharing Contracts (PSC) with. The Ministry order has stated that timeline for receiving comments on the draft MRSC has been extended up to September 30, 2014.

The government had floated an MRSC after a Committee headed by C Rangarajan suggested moving to a revenue sharing regime where companies bid upfront the quantity of oil and gas they will share with the Government for winning an exploration acreage. Presently the companies get blocks by bidding maximum work programme and then recovering all of their investment before sharing profits with the Government.

The present model was criticised by CAG, which said it encouraged companies to keep raising cost so as to postpone higher share of profits to the Government, hence government accepting C Rangarajan’s committee suggestions floated a MRSC. Under the new regime, the companies will have to indicate the quantity of oil and gas they will share with the Government at different stages of production as well as at different rates.