Rangarajan heads panel to review oil and gas exploration contracts

The government has set up a committee headed by C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, to suggest changes in existing oil and gas exploration contracts with energy firms.

The committee will suggest ways to minimise monitoring of expenditure, fix system to determine domestically produced natural gas price and modify existing profit-sharing mechanism, which according to the Comptroller and Auditor General, favoured private energy firms.

The committee will specifically look into the existing PSC with a view to review the current profit-sharing mechanism with the pre-tax investment multiple (PTIM) as the base parameter and recommend necessary modification for the future PSCs.

It will explore various contract models with a view to minimise monitoring of expenditure of the contractor without compromising on the hydrocarbons output across time and on the government's take.

The committee will arrive at a suitable mechanism for managing the contract implementation of PSCs, which is now being handled by the representation of regulator/government nominee appointed to the management committee.

Besides, it will work out suitable governmental mechanisms to monitor and audit Government of India share of profit petroleum; structure and elements of the guidelines for determining the basis or formula for the price of domestically produced gas, and for monitoring actual price fixation; and any other issues relating to PSCs.