North Block nixes IOC's foreign plan

The Cabinet on Friday deferred a decision on giving more financial powers to Indian Oil Corporation and Oil India Ltd for exploration abroad.

It also put off the setting up of the National Urban Renewal Mission.

Officials told Business Standard that the finance ministry was opposed to the petroleum ministry's proposal to allow IndianOil-OIL to foray into oil and gas exploration abroad as this could create unnecessary competition for ONGC Videsh Ltd.

Though the petroleum ministry had inserted a clause to ensure that both would not bid for same projects, North Block officials felt that Indian Oil and OIL should instead look to be strategic investors in OVL's forays abroad.

Finance ministry had asked the petroleum ministry to review its proposal as navratanas had already been given greater autonomy in investments and joint ventures. IndianOil is a navratna identified by the government.

While the IndianOil board can clear investments of up to Rs 1,000 crore (Rs 10 billion), the OIL board has powers to approve investment proposals of up to Rs 150 crore (Rs 1.5 billion).

The Cabinet on Thursday also deferred a decision to operationalise the Rs 50,000 crore (Rs 500 billion) National Urban Renewal Mission, which was to be used for investment in urban infrastructure if municipal bodies achieved certain milestones.

Information and Broadcasting Minister Jaipal Reddy told reporters that the proposal was discussed but could not be passed as some "fine tuning" was needed. He said the proposal would again be put before the Cabinet soon.

Officials said the finance ministry has raised issues pertaining to the cost of the project, the sources of financing and the time period of its implementation.

They pointed out that the urban development ministry had not adhered to the original proposal and had proposed to go ahead with the scheme, even if the milestones were not achieved.

The finance ministry had also opposed the proposal for a 100 per cent grant and was in favour of a mix of grant and loans for the scheme which was to be implemented in over 50 cities.

The urban development ministry had sent the Cabinet note to the secretariat even without circulating the note for comments to other ministries and departments.

The Cabinet secretary had returned the proposal and asked the urban development ministry to seek the comments from other agencies.