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Published:Tuesday, February 01, 2022 4:55 PM

Oil & Gas Sector Budget Highlights for 2022-23

Oil & Gas Sector Budget Highlights for 2022-23

As per Budget 2022-23, the Government of India is expecting 9.2% GDP economic growth in the current financial year. After the first wave of Covid 19, the overall Sharp rebound and speedy recovery of the economy is a major factor of our country’s strong resilience and positive economic growth. GOI has set four top priorities in the union budget. The first one, Push in public investment, secondly, Inclusive development and optimization (Productivity Enhancement and Investment, Sunrise Opportunities, Energy Transition, and Climate Action), and Finance development. The government of India is committed to reducing imports of fossil fuels( Major crude oil and LNG) and shifting to renewable energy sources. The risks of climate change are the strongest negative externalities that affect India and other countries. Low carbon development strategy, saving energy, clean energy, and commitment in COP 26 summit is an important reflection of the Indian government’s strong commitment towards sustainable development. 

The petroleum & Gas sector played a critical role throughout the COVID 19 lockdown period by maintaining fuel supplies across the country, without any interruption. The scheme of three free cylinders to Ujjwala beneficiaries provided much-needed relief to the poor households during Covid times. The second phase of the Pradhan Mantri Ujjwala Yojana, Ujjawala 2.0, was launched on 10th  August, 2021 on a pan India basis to provide an additional one crore LPG connections along with free first refill and stove. On 28th January 22, PNGRB has closed and distributed the Geographical area under the 11th CGD Bidding round to CGD companies. 

In its pre-budget memorandum, the Federation of Indian Petroleum Industry (FIPI) requested to the finance ministry and Government of India to focus on including natural gas GST in the Regime, increasing natural gas share in the energy market, GST on natural gas transportation should be rationalized, and reduce 18% GST on Imported LNG regasification and Reduce social welfare surcharge (currently 10%) on LNG Import. In Budget, Finance minister announced only blending of fuel related to oil and gas industry.   To tariff measure to encourage efforts for blending of fuel, unblended fuel shall attract on additional on excise duty of 2rs per liter form 1st October 2022. Otherwise, there is no new announcement for further advancement and any expansion of existing operations in the Oil and Gas Industry. 

Total Budget Allocation for Oil and Gas Sector: 2022-23

In the 2022-23 Budget, the government of India has allotted INR 8939.86 Crore to the Ministry of Petroleum and Natural Gas, which has decreased by 43% as compared to the previous year. Around 65% of budgets has allotted for LPG Subsidy under MoPNG.

Way Forward/Infraline Views:

Budget 2022-23 indicates that the government of India is focusing on blending or mixing of fuel in convention fuels such as ethanol in gasoline

A major part of the budget has allocated to the LPG subsidy to increase the consumption of gas as the primary source of energy in the rural areas as well.

Major points that are missing from the budgets as per the industry expectations are the Bio-fuels, pipeline natural gas and petroleum products under GST, OID cess & tax exemptions.

 

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