Health Care, Oil and Gas Sector

Health Care

INTRODUCTION
Health should be viewed as not merely the absence of disease but as a state of complete
physical, mental and social well-being.
Approximately 1.72 million children die each year before turning one.
More than 2 million children die every year from preventable infections.
Reduced funding for immunization leaves only 43.5% of the YOUNG people fully
immunized.
Infrastructure like hospitals, roads, water and sanitation are completely lacking in rural
areas.
Over 50% of the population (638 million) defecate in the open.

CURRENT SCENARIO

Comparative Chart
300
254
250
212
200

150
100 100 100
100 72 73
57 54 59
44
50 25

0
Proportion of Fully
Infant Mortality rate Maternal mortality ratio Institutional deliveries (%)
Immunized Children (%)
2006 57 254 54 59
Recent 44 212 72 73
Ideal 25 100 100 100

The number of doctors per lakh of population:

45 whereas, the desirable number is 85
Nurse availability per lakh
75 whereas the desirable number is 255.
 Required VS Available
300
255
250

200

150
85
100 75
45
50

0
Doctors Nurses
Available 45 75
Required 85 255

CURRENT PRACTICE (BASIC HEALTH-CARE & PRIMARY

EDUCATION)
Environment, Forestry and Wildlife
To reduce under-nutrition among children aged 03 years to half of the NFHS-3 levels
by the end of Twelfth Five Year Plan.
Diseases such as malaria, yellow fever, dengue and cholera are all sensitive to climate
change.
The Indian Council of Medical Research (ICMR) has identified four areas of risks
arising from climate change:
(i) Climate Change and vector borne diseases,
(ii) aerosols and respiratory diseases,
(iii) UV-A and UV-B corneal damage and cataract and
(iv) environment and heart diseases.

Science and Technology

Following this assessment, the ICMR has constituted Task Force Groups:
(i) Vector Borne Diseases and Climate Change
(ii) Respiratory Diseases and Air Pollutants and
(iii) Eye Health and Environment
 The affordable health technology initiative with Welcome Trust will be launched. It will
have a pro-poor bias, focus on mass health impact and enhance our abilities to access
technology from overseas in addition to from within the country.
Six new autonomous R&D institutions, namely,
(i) Translational Health Science and Technology Institute, Faridabad;
(ii) Regional Centre for Biotechnology, Faridabad;
(iii) National Agrifood Biotechnology Institute, Mohali;
(iv) National Institute of Biomedical Genomics, Kalyani;
(v) Institute of Stem Cell Biology and Regenerative Medicine, Bangalore;
(vi) National Institute of Animal Biotechnology, Hyderabad were set up.

Governance
Unlike rural residents, urban areas have access to private health care providers, but
private health care is costly and large numbers of urban slum dwellers cannot afford it.
Public health implications of unclean water are unacceptable:
o Prime Culprits are:
children under the age of five
diarrhoea and
other water borne diseases
The Twelfth Plan will focus on the need to invest in water and waste management in
human settlements based on a strategy that is both affordable and sustainable.
Every scheme under BSUP to be compulsorily equipped with atleast 1 UHC (Urban
Health Centre).
Every school under Sarva Siksha Abhiyaan to be equipped with MDM (Mid-Day Meal)
Kitchen
Mid-day Meal and Integrated Child Development Services Scheme- The total
Government expenditure as a proportion of GDP in the Twelfth Plan is likely to increase
from 1.94 per cent of GDP in the last year of the Eleventh Plan to 3.04 per cent in the
corresponding year of the Twelfth Plan.
In the Twelfth Plan, a 200-bed district-level hospital would serve a catchment area of
about 810 lakh of population (20 lakh for a 300-bed tertiary care hospital). This will
help families from the economically disadvantaged groups get access to quality health
care through hospitals set up under this scheme, especially those who are covered under
the Rashtriya Swasthya Bima Yojna (RSBY).

CONCLUSION (NEGATIVE INFERENCES)

Acute shortage of health professionals.
Affordability of health care is a serious problem.
Reduce IMR to 25 and MMR to 1 per 1,000 live births, and improve Child Gender Ratio
(06 years) to 950 by the end of the Twelfth Five Year Plan seems a difficult task.
 When broader determinants of health (drinking water and sanitation, Mid-Day Meal)
are added, the total public spending on health in Eleventh Plan comes to 1.94 per cent
of GDP, which was not enough so a revision plan is in action.
Lack of sound HR management policies results in irrational distribution of available
human resource and suboptimal motivation.

CONCLUSION (POSITIVE INFERENCES)

The Twelfth Plan will therefore see the transformation of the NRHM into a National
Health Mission, covering both rural and urban areas.
Urban Health Initiative for the Poor, providing public sector primary care facilities in
selected low-income urban areas.
Introduction of MDM (this may be motivating and innovative concept to many but it
has been introduced in CHINA in the mid 90s).

FUTURE SCOPE
Strengthening Data Collection and Management Systems is a must of health care.
High level Expert Group on Universal Health Coverage.
Healthcare conditions are improving in the country but its affordability and accessibility
is still an area to be focused on. Curative and preventive healthcare would help in
increasing general quality of life.
Focus on women and children is essential but importance to elderly class and handicaps
in order to achieve inclusive healthcare development is essential.
Shortage of qualified medical personnel at all levels is a major hurdle in improving the
outreach of the healthcare system, especially the public health facilities.
To plan for an expansion of teaching and training programmes for healthcare
professionals, particularly in the public sector institutions.
We also need to focus much more on a provision of clean drinking water and sanitation,
which can make a major contribution to improved health. (Article- 1.60 Twelfth Plan:
An Overview page no. 13).
Reduce under-nutrition among children aged 03 years to half of the NFHS-3 levels.
PPP in Health Care Services.
The Twelfth Plan must make children an urgent priority.

PRESENT COMPLICATIONS
On the goal of raising child gender ratio & malnutrition NO DATA is still a certifiable
data!!!
Health Management Information System (HMIS) as recommended is still not formed.
Nine AYUSH industry clusters through Special Purpose Vehicle having common
facility centres for manufacturing and testing of AYUSH medicines are to being set up
in eight States (but the work for none has still not even started).
Setting up of 6 AIIMS like institutes and upgradation of 13 medical colleges has been
taken up under Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) is only partially
fulfilled.
>36 institutes related to healthcare are present but none is publicized
Different forms of malnutrition
o Protein-energy malnutrition (PEM), also known as protein-calorie
malnutrition
o Iron deficiency : nutritional anaemia which can lead to lessened productivity,
sometimes becoming terminal
o Vitamin A deficiency, which can lead to blindness or a weakened immune
system.
o Iodine deficiency, which can lead to serious mental or physical complaints
o Foliate deficiency itself can lead to insufficient birth weight or congenital
anomalies such as spina bifida.
 Oil and Gas Sector

INTRODUCTION
The oil and gas industry ranks amongst Indias six core industries.
In 199798, the New Exploration Licensing Policy (NELP) was envisaged to fill the
ever-increasing gap between Indias gas demand and supply.
A recent report points out that the Indian oil and gas industry is anticipated to be worth
US$ 139.8 billion by 2015.
Indias economic growth is closely related to energy demand; therefore the need for oil
and gas is projected to grow more.
The Government of India has adopted several policies to fulfil the increasing demand.
The government has allowed 100 per cent foreign direct investment (FDI) in many
segments of the sector, including natural gas, petroleum products, and refineries, among
others.
Today, it attracts both domestic and foreign investment.

Share of each fuel in total energy production and consumption

Source: Twelfth Five Year Plan, Volume-II

 Trends in supply of primary commercial energy

Source: Twelfth Five Year Plan, Volume-II

Household Access

Source: Twelfth Five Year Plan, Volume-II

The oil and gas industry is usually divided into three major sectors:
Upstream
Midstream
Downstream
UPSTREAM
The upstream sector includes the searching for potential underground or underwater
crude oil and natural gas fields, drilling of exploratory wells, and subsequently drilling
and operating the wells that recover and bring the crude oil and/or raw natural gas to
the surface.
Exploring Oil:
o The only sure way of finding hydrocarbons is to drill through maybe thousands
of metres of rock and see whether oil or gas can be detected.
o Almost without exception, hydrocarbons are found in sedimentary basins.
o These are huge areas throughout the world, which can either be on land, or
below the sea.
o Today, the most important techniques that are used to locate oil and gas fields
are called geophysical surveys such as seismic surveys.
Drilling:
o Drilling wells is the only sure way to find oil and gas, determine the size of a
field, assess whether it can be produced profitably, and finally, produce the oil
or gas.
On-shore drilling:
o Drillers have to prevent high pressure water, oil and gas unexpectedly moving
violently up the hole to the surface, causing what is called a blow-out.
 o Offshore drilling:
o When drilling at sea, equipment similar to that shown and described above is
mounted on a floating vessel, together with accommodation for the geoscientists,
engineers, and crew.
o In shallow water, jack-up rigs are used.
o In deeper water, semi-submersible rigs are used.
o In very deep water, typically greater than 1500 m, drilling ships are used.
o At the bottom of such wells, perforations or meshes are constructed using special
tools, which allow the oil and gas out of the rocks and up the well bore to the
surface, where they may be produced and transported to the refinery or gas plant
for processing.

MIDSTREAM
The midstream sector involves the transportation (by pipeline, rail, barge, oil tanker or
truck), storage, and wholesale marketing of crude or refined petroleum products.
Pipelines and other transport systems can be used to move crude oil from production
sites to refineries and deliver the various refined products to downstream distributors.
Natural gas pipeline networks aggregate gas from natural gas purification plants and
deliver it to downstream customers, such as local utilities.
DOWNSTREAM
The downstream sector commonly refers to the refining of petroleum crude oil and the
processing and purifying of raw natural gas, as well as the marketing and distribution
of products derived from crude oil and natural gas.
The downstream sector touches consumers through products such as gasoline or petrol,
kerosene, jet fuel, diesel oil, heating oil, fuel oils, lubricants, waxes, asphalt, natural gas,
and liquefied petroleum gas (LPG) as well as hundreds of petrochemicals.
STATISTICS
India was the fourth largest consumer of crude oil and petroleum products in the world
in 2013, after the United States, China and Japan.
Oil imports constitute over 80% of Indias total domestic oil consumption as of May,
2014.
Oil and gas contribute 39.2% to primary energy consumption.
During 2013-14, natural gas constituted about 7.8% of the energy mix.
India had 47 Trillion cubic feet of proven natural gas reserves at the beginning of
2014.
Investments worth USD 70 Billion are expected across the oil and gas value chain
during 201217.
At the end of 2013, India had 215.066 MMTPA of refining capacity, making it the
second largest refiner in Asia after China. Private joint venture companies own about
41% of total capacity.
India increasingly relies on imported LNG; the country was the fourth-largest LNG
importer in 2013 and accounted for 5.5% of global imports.
Indias crude oil pipeline network spans just under 9,460 miles and has a total capacity
of 129.4 MMTPA.

GROWTH DRIVERS
India held nearly 800 MMT of proven oil reserves at the beginning of 2014, mostly in
the western part of the country.
About 44% of reserves are onshore resources, while 56% are offshore. The countrys
natural gas pipeline network amounted to over 15,340 km in 2013 and a proposed
expansion of 30,000 km is envisaged by 2018-19.
The government has decided to set up strategic storage of 5.03 MMT of crude oil at 3
locations Visakhapatnam, Mangalore and Padur.
The government unveiled plans to add another 91 Million barrels to its crude oil
capacity to protect India from supply disruptions by 2017.
India projects an increase of the countrys refining capacity to 307.366 MMTPA by
2017 based on its current Five Year Plan (2012-17) to meet rising domestic demands
and export markets.
The government is in the process of determining the structure of petroleum contracts
between the government and companies. The current system includes a production-
sharing mechanism, allowing producers to recover exploration costs during production
before sharing profits with the government.
In recent years, major discoveries in the Barmer basin in Rajasthan and the offshore
Krishna-Godavari basin by smaller companies such as the Gujarat State Petroleum
Corporation and Andhra Pradesh Gas Infrastructure Corporation hold some potential
to diversify the countrys production.

GOVERNMENT INITIATIVES
India and Norway have discussed bilateral relationship between the two countries in the
field of oil and natural gas and decided to extend cooperation in hydrocarbon
exploration.
 To strengthen the country`s energy security, oil diplomacy initiatives have been
intensified through meaningful engagements with hydrocarbon rich countries.
PAHAL - Direct Benefit Transfer for LPG consumer (DBTL) scheme launched in 54
districts on November 11, 2014 and expanded to rest of the country on January 1, 2015
will cover 15.3 crore active LPG consumers of the country.
24 x 7 LPG service via web launched to provide LPG consumers an integrated solution
to carry out all services at one place, through MyLPG.in, from the comfort of their
home.
Special dispensation for North East Region: For incentivising exploration and
production in North East Region, 40 per cent subsidy on gas price has been extended to
private companies operating in the region, along with ONGC and OIL.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Mr.
Narendra Modi, has approved a mechanism for procurement of Ethanol by Public Sector
Oil Marketing Companies (OMCs) to carry out the Ethanol Blended Petrol (EBP)
Program.
AUTO FUEL POLICY
The Government of India constituted a Committee of Experts under the
chairmanship of Dr. R. A. Mashelkar, DG, CSIR to recommend an Auto Fuel Policy
for the country.
The Committee recommended the following road map for upgradation of fuel
quality in the country:
o BS-III standard auto fuels for 13 identified cities and BS-II standard auto
fuels for rest of the country w.e.f. 01-04-2005.
o BS-IV auto fuels (MS/HSD) in NCR and 13 identified cities and BS-III auto
fuels in the rest of the country w.e.f. 01-04-2010.
o MoP&NG has decided to go beyond Auto Fuel Policy recommendations and
to expand BS-IV auto fuels to 50 more cities by March 2015 with preference
to most polluted cities, state capitals and cities with million plus population
subject to logistic constraints.

NELP (NEW EXPLORATION AND LICENSING POLICY)

New Exploration Licensing Policy (NELP) was conceptualised by the Government
of India, during 1997-98 to provide an equal platform to both Public and Private
sector companies in exploration and production of hydrocarbons with Directorate
General of Hydrocarbons (DGH) as a nodal agency for its implementation.
It was introduced to boost the production of oil and natural gas and providing level
playing field for both public and private players.
Licenses for exploration are being awarded only through a competitive bidding
system and National Oil Companies (NOCs) are required to compete on an equal
footing with Indian and foreign companies to secure Petroleum Exploration Licences
(PELs).
Nine rounds of bids have so far been concluded under NELP, in which production
sharing contracts for 254 exploration blocks have been signed.
 Need for NELP:
o With the introduction of the New Exploration Licensing Policy (NELP), the
introduction of much-needed capital and state-of-the-art technology to explore
the sector could be made possible.
o With the policies and regulations being some of the most transparent in the
world, the NELP has revived a healthy spirit of competition between National
Oil Companies and private and multinational companies.
Salient Features:
o 100% FDI is allowed under NELP.
o Blocks to be awarded through open international competitive bidding.
o Freedom to the contractors for marketing of crude oil and gas in the domestic
market.
o Royalty at the rate of 12.5% for the onshore areas and 10% for offshore areas.
o Companies to be exempted from payments of import duty on goods imported
for petroleum operations.
o No signature, discovery or production bonuses.
o Contracts to be governed in accordance with applicable Indian Laws.

OALP (OPEN ACREAGE LICENSING POLICY)

The NELP series of auctions of oil and gas blocks would be replaced by the Open
Acreage Licensing Policy (OALP), under which upstream oil companies would be
permitted to put in bids for securing oil and gas blocks throughout the year, instead
of waiting for the government to identify and put resources on the auction block.
The contours of the new policy regime would essentially have three elements; open
acreage, uniform licensing enabling companies to explore and produce all forms of
hydro-carbons from a single block, and revenue-sharing to replace the current
production sharing regime.
Under OALP, prospective upstream oil companies would be provided all data
related to oil and gas blocks prior to putting in bids, which could be anytime
throughout the year.
But with differences, legal challenges and companies claiming lower recoverable
resources after recovering costs of exploration and production, the last auction round
would be held under revenue-sharing agreement, and the successful bidder would
be selected on the basis of commitment to revenue sharing and an amount of gas
and oil the bidder would offer from the very first day of production.
COAL BED METHANE POLICY
Government has been awarding CBM Blocks in a transparent manner through a
process of International Competitive bidding similar to NELP Blocks.
Under this policy, Government has awarded 30 CBM Blocks.
Salient Features:
o No signature bonus.
o Royalty at the rate of 10% on the value of CBM in accordance with Oilfields
(Regulation and Development) Act, 1948.
o Freedom to market gas in domestic market at market determined prices.
 o No customs duty on imports required for CBM operations.
o Arbitration provisions governed by Arbitration and Conciliation Act, 1996.
o Corporate income tax payable as per the Income Tax Act, 1961.
o One time lump sum Commercial Bonus of US $ zero point three (0.3) million
by foreign companies or equivalent amount in Indian Rupees by Indian
companies, after declaration of commerciality of CBM.
FDI POLICY
FDI upto 100% is permitted under automatic route in exploration activities of oil
and natural gas fields, infrastructure related to the marketing of petroleum products
and natural gas, marketing of natural gas and petroleum products, petroleum product
pipelines, natural gas/pipelines, LNG re-gasification, market study and formulation
and petroleum refining in the private sector.
FDI in the above activity is subject to the existing policy and regulatory framework
in the oil marketing sector and the policy of the government on private participation
in exploration of oil and the discovered fields of national oil companies.
FDI upto 49% is permitted under automatic route in petroleum refining by Public
Sector Undertakings (PSUs), without any disinvestment or dilution of domestic
equity in the existing PSUs.
FINANCIAL SUPPORT
Key Provisions of The 2o14-2o15 Union Budget:
Cut in excise duty of branded petrol from INR 7.50 per litre to INR 2.35 per litre.
An additional 15,000 km of gas pipeline will be developed using appropriate PPP
models.
Reduction in fuel subsidies through appropriate measures.
Fiscal Incentives:
All exploration and drilling costs are 100% tax-deductible. Such costs are aggregated
until the year of commencement of commercial production.
A special deduction is available for provisions made for site restoration expenses if the
amount is deposited in a designated bank account. The deduction is the lower of the
following amounts: the amount deposited in a separate bank account or site restoration
account, or 20% of the profits of the business in the relevant financial year.
Export Incentives:
Under the Exports Promotion Capital Goods Scheme, the import of capital goods at a
zero basic custom duty is allowed for export purposes.
Capital goods for the pre/post production stage are also permitted. The exports are to be
effected equivalent to six times the duty saved on capital goods. Exports are to be
completed in 6 years.
Focus Market Scheme:
The basic objective is to offset high freight cost and other externalities to select
international markets.
A benefit of 3% transferable duty-free credit entitlement for specified countries has been
envisaged; special focus markets get 4% benefits.
Area-Based Incentives:
Incentives for units in Special Economic Zones (SEZs) and National Investment and
Manufacturing Zones (NIMZs) are specified in respective acts.
Plans have been made for the setting up of projects in special areas such as the North-
east, Jammu & Kashmir, Himachal Pradesh and Uttarakhand.
INVESTMENT OPPORTUNITIES
Shale:
India has technically recoverable shale gas resources of nearly 96 Trillion cubic feet.
Underground Coal Gasification:
Coal gasification has been identified as one of the end uses under the governments
captive mining policy.
Opportunities for E&P Services and Equipment Companies:
48% of the countrys sedimentary area is yet to be explored.
The city gas and distribution sector offers opportunities for both incumbents and new
companies.
The Petroleum and Natural Gas Regulatory Board allows the following incentives to
authorized entities:
The infrastructure exclusivity is available to the authorized entity for a period of 25
years.
Exclusivity for the activity of marketing of natural gas is allowed to the authorized entity
for a period of 5 years. For incumbents, the marketing exclusivity extends to a period
of 3 years.
Opportunities for Pipeline Transportations:
Compared to advanced economies like the US, where more than 60% of petroleum
product movement happens by pipeline, in India, currently, only 35% of product
movement happens over pipelines.
The Refining Sector:
India is already a refining hub with 22 refineries and expansions planned for tapping
foreign investment in export-oriented infrastructure, including product pipelines and
export terminals.
Opportunities For Foreign Investments And Technology Partnerships In The Upstream
Sector:
Securing supplies is expected to remain on top of Indias energy agenda for the
foreseeable future.
While exploration activity has taken place on land and in shallow basins across the
country, it is believed by many that deep water and ultra-deep water oil and gas
resources hold the key to substantially increasing domestic production.
This creates a plethora of opportunities for strategic investors having relevant technical
expertise and financial muscle.