Virtually ruling out giving statutory powers to upstream oil and gas regulator, the Directorate General of Hydrocarbons (DGH), the Oil minister Dharmendra Pradhan has said that the oil and gas sector has not fully developed and needs government support. Various committees have suggested creation of an independent, statutory regulator for the upstream oil sector. The DGH is a technical arm of the oil ministry which overseas upstream oil and gas exploration and production activities.
Talking further on the demand for DGH to be made a statutory body like market regulator SEBI, Pradhan stated that the sector has not developed fully and still looks at the government for reforms. He said 'Does a sector which has not developed fully, a sector which expects government to do reforms, should be talk of that.' He added that it was not right to put 'jargons' like statutory regulator for the sector.
There are two regulatory bodies in the oil and gas sector - the Petroleum and Natural Gas Regulatory Board, which is a regulator for the downstream activities like laying of pipelines and fuel marketing but without powers to review pricing. The DGH currently manages petroleum resources besides monitoring production sharing contracts (PSCs), and assists the government in auctioning oil and gas exploration fields. It is manned by staff drawn on deputation or tenure basis, mainly from state-owned firms like Oil and Natural Gas Corporation (ONGC) and Oil India (OIL).
The government's recent Integrated Energy Policy noted that the present upstream regulation provided by the DGH was 'neither independent nor comprehensive in a technical sense' and the 'current arrangement needs to be strengthened and made independent'. Moreover, a committee, headed by former finance secretary Vijay Kelkar in 2013, had recommended hiving off the DGH's financial oversight function and vesting it with the income tax authorities. Parliamentary standing committees too have recommended an independent upstream regulator.