Civil penalties proposed for petroleum license violation

The Government has proposed decriminalising regulatory breaches such as violations of petroleum licence terms and introducing a civil-penalty regime, while retaining or strengthening criminal penalties for serious offences involving public safety, critical infrastructure and unauthorised petroleum operations.

The Ministry of Petroleum and Natural Gas has sought public and industry comments on draft amendments to the Petroleum Act, 1934, proposing a major overhaul of the law’s provisions dealing with offences, penalties and enforcement.

The Petroleum Act, 1934, was enacted to consolidate and amend the law relating to the import, transport, storage, production, refining and blending of petroleum.

“It is proposed to amend the Petroleum Act, 1934, through amendment... to achieve the objectives of de-criminalisation of regulatory issues such as breach of terms and conditions of licenses and provides for a mechanism for imposition of civil penalty through an administrative mechanism,” the ministry said, seeking comments on the draft amendments. The proposed amendments “provide adequate deterrence against specific offences relating to various aspects of petroleum operations”, it added.

Under the proposed amendments, breaches of licence terms would be dealt with through an administrative adjudication mechanism rather than criminal prosecution. An adjudicating officer could impose a civil penalty of up to Rs 2.5 crore for a first breach and up to Rs 5 crore for a second or subsequent breach. The adjudicating officer could also direct a licence holder to take or refrain from taking specific actions to prevent or remedy a breach, while recommending suspension, revocation or curtailment of a licence to the licensing authority.

The proposed framework would, however, retain criminal liability where a licensing breach endangers public safety or causes grievous hurt or death, with such proceedings continuing under other applicable laws.