If the government has to lease out fewer oil and gas exploration blocks than it actually wanted to in the next round of Nelp auctions due in August , this will be because of an external market factor—the shortage of deepwater rigs—not on account of policymakers.
But the government has been only too keen to push as many blocks as it can for auctioning since Nelp was first launched in 1999. Only after eight years has it woken up to plug contractual loopholes that undermine its profit share in the exploration blocks on offer—all these years, there was mainly minor tinkering. The implication is that higher rent could have been earned from the deals already done.
Save this profit share, the rest of the oil and gas is sold by the contractor at market rates. So the government can maximize its gains from leasing out the blocks only if the terms are designed to suit. These are long-distance investments. And the government can ill afford to lose where it matters the most.