India ponders energy tax holiday

NEW DELHI, June 23 (UPI) -- New Delhi is considering an extended tax holiday to oil and gas exploration industries to kick-start the struggling domestic energy sector.

Development of national oil and gas reserves is limping along in India. The country receives 75 percent of its energy resources from imports and has reached deals with Washington to develop a civilian nuclear energy program.

Under the National Exploration Licensing Policy licensing plan, operators were offered a transparent way to bid on exploration blocks. New Delhi hopes to entice further developers to explore the country under a seven-year tax holiday under the NELP.

New Delhi has raised the possibility of opening another round of auctions under NELP but needs to develop the mechanisms for the tax holiday first, the Financial Times reports.

Meanwhile, the government is facing massive bills for its fuel subsidies as the price of oil surges from below $40 per barrel of crude in late 2008 to around $70 in recent trading.

In the gas sector, India's position on two pipelines, one from Iran and another from Turkmenistan, remains in doubt because of Washington's concern over dealing with Tehran and from the potential for nuclear energy.