Oil producer ONGC has said it may miss the June 2019 target for starting production from its Krishna Godavari basin block due to new policies like GST and local purchase preference rules, including the one that mandates state-owned firms to source domestic iron and steel for infrastructure project.
Clarifying on its last week's filing to stock exchanges, Oil and Natural Gas Corp (ONGC) said the new policies it had cited for a possible delay pertained to local purchase preference policy, steel policy and GST policy.
“The new policies concerning oil and mining sector, as referred in the reply of ONGC to NSE and BSE, though not amply clarified in the reply, were pertaining to policies like purchase preference policy, steel policy, GST policy etc. And not regulatory policy,” ONGC said in a statement.
While the ONGC Board had in March 2016 approved a $5.07 billion investment for bringing oil and gas discovered in the KG-DWN-98/2 or KG-D5 block in Bay of Bengal to production, new policies were formulated last year.
The Union Cabinet in May 2017 approved a policy that will prefer sourcing of domestic iron and steel for infrastructure projects by state-owned companies in a bid to boost Make in India.
Also, a policy has been formulated to give public enterprises purchase preference if their bid is within 10 per cent of the lowest price. Goods and Services Tax (GST) was also rolled out in July 2017.