GOVERNMENT OF NAGALAND GEOLOGY & MINING DEPARTMENT NOTIFICATION Dated Kohima the 7 th December 2012 No:GM 3/ONGC 35/2009:: In exercise of the powers conferred upon it by Regulation No. 24 of the Nagaland Petroleum and Natural Gas Regulations, 2012 which is approved by the Cabinet Sub committee on Petroleum and Natural Gas on 12.9.2012; approved by the Nagaland Cabinet on 13.9.2012, and approved by the Nagaland Legislative Assembly on 22.9.2012, the Government of Nagaland, in consultation with the Tribal Hoho(s) as required under sub clause (4) of Regulation 24 and as approved by the cabinet on 26.11.2012 hereby makes the following Rules: Short title, extent and commencement: 1. (1) These Rules shall be called the Nagaland Petroleum and Natural Gas Rules, 2012. (2) These shall extend to the whole of Nagaland. (3) These rules shall come into force with effect from the date of its publication in the Official Gazette of Nagaland. Definitions, Interpretation & applicability of other practices: 2. (1) Words and expressions used herein shall have the same meaning as assigned to them in the Nagaland Petroleum and Natural Gas Regulations, 2012 [here after called as Regulation(s) ] and, in the absence of such meaning in the said Regulations, the words and expressions used herein shall have the same legal connotation as assigned to them in any other law. (2) In case of any ambiguity in the interpretation of these Rules, the decision of the State Government shall be final: Provided that any such interpretation as relates to customary practices shall have prior consultation with the Naga Hoho/ENPO and other Tribal Hoho(s) concerned. (3) Matters for which provision has not been made specifically in these Rules, may be governed by global practices including the national ones, whether such practices are supported by law or not, subject to their being consistent with the customary practices of Nagaland. (4) The decision of the State Government, after consultation with the said Hoho(s) as regard to the question whether a practice so imported into these Rules under sub clause (3) above, is consistent with customary practices of Nagaland or not, shall be final. Organizational Structure: 3. (1) The superintendence, direction, regulation, control and other connected powers in relation to all operations under the Regulations and these Rules shall be 1
vested in a three level organizational structure as under, with the first level having absolute command and control over the next two, the second level having such command and control over the next one: (a) (b) (c) A Group of Ministers (GoM) headed by the Chief Minister of Nagaland and comprising two or more Ministers including the Minister in charge, which shall be known as Ministerial Group Petroleum and Natural Gas, shortly MG, shall be the first level; A Core Group of Officers of not more than 3 of the rank of Secretary and above to the Government of Nagaland and headed by an officer not lower than the rank of a Principal Secretary including the Secretary in charge, which shall be known as Nagaland P&NG Board, shortly the Board with the head designated as Chairman and other officers as Members of the Board, with one acting as Secretary to the Board, shall be the second level; and An team of Officers, Technocrats, Economists, Statisticians, Academicians, experts in the industry, legal and business advisors etc., commensurate to the requirements of work relating to the operations, who may be appointed by the State Government from the existing officers and staff on the live roll or through fresh recruitments, which shall be known as Operational Wing P& NG, shortly OW, shall be the third level. (2) All the appointments to the above three levels shall be notified in the Official Gazette of Nagaland. (3) No decision, small or big, under the Regulations and these Rules shall be taken without the approval of the MG, unless clearly the power to do so, has been delegated by the MG, in writing, to the Board. (4) Any such delegation of powers by the MG to the Board shall be duly notified in the Official Gazette. (5) The OW shall always function under the superintendence, direction, regulation and control of the Board. (6) Any decision taken by the OW, in extreme exigencies, without the prior approval of the Board, shall, however, be got ratified within a week of such decision from the Board and the MG. Member Secretary of MG, Legal Advisor and Commercial Consultant: 4. (1) The Chairman of the Board shall be the ex officio Member Secretary of the MG. (2) The Legal Advisor to the Government of Nagaland shall be the ex officio Legal Advisor to the MG and the Board. (3) The Board may engage an expert consultant on oil and gas to assist/advise it. President of Naga Hoho/ENPO to be permanent invitee to Board: 5. The President of the Naga Hoho and the President of the ENPO shall be the ex officio permanent invitees to the meetings of the Board. Earmarking of zones: 2
6. (1) The State Government, as soon as possible, identify the zones for preproduction, production and post production operations in the State and name them in the following manner: (a) Every zone s nomenclature shall start with NL indicating that the zone is in Nagaland; (b) Every zone shall be identified whether it is a petroleum zone or natural gas zone by adding to NL, O if it is a petroleum zone, G if it is a natural gas zone, and OG if it is both; (c) Every zone shall further be identified with a serial number indicating the district in which it falls, after all the 11 districts of Nagaland have been given a serial number; and (d) Every zone s nomenclature shall also contain an indication as to whether it is a pre production zone, production zone or post production zone and the following shall be the indicators: (i) Pre production zone E (ii) Production zone P (iii) Post production zone R (iv) If it is a mixed zone involving M more than one operation (2) There is no bar for the State Government to rename the existing Oil and Gas blocks without undertaking a fresh identification exercise. (3) The State Government is not barred from adding any other additional indicators to the above nomenclature. (4) A list of (i) serial number of the 11 districts and (ii) such zones, so earmarked, shall be published in the Official Gazette of Nagaland. Advertisement of zones: 7. (1) As soon as the list of zones has been published in the Official Gazette of Nagaland, it shall be the duty of the Chairman, Nagaland P&NG Board, to offer these zones for operations to companies by inviting them to give their expression of interest by public advertisement. (2) The advertisement aforesaid shall be published in all the newspapers having circulation in Nagaland and shall be broadcast and telecast on AIR, Kohima Kendra and Doordarshan, Kohima Kendra respectively. (3) The advertisement shall also be web cast on the official website of the Government of Nagaland. (4) A copy of the Regulations and these Rules shall be placed on the Official website of the Government of Nagaland prior to publication of the advertisement. 3
(5) The advertisement shall be so framed so as to seek from the intending companies all necessary details for a proper evaluation of the company for granting zones for undertaking relevant operations and principally the following information: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) The company s financial and functional profile since its inception; The company s previous track record in Nagaland; The company s previous track record in other parts of India; Whether the company was ousted from operations in Nagaland or in other parts of India for any reason, and if so, the detailed reasons for such ouster or temporary displacement from operations; Whether the company has any litigation against the Government of Nagaland in any court of law on any ground, and if so, the details of such litigation with grounds; The International Petroleum and Natural Gas Index to which the Company proposes to pitch its value of petroleum and natural gas to be produced in Nagaland, for the purpose of revenue sharing under Regulation No. 14; The details of proposals regarding its capacity to undertake preproduction, production and post production operations in any zone; and The details of its proposals in regard to discharging its Corporate Social Responsibility in the zone(s) and in the State as a whole. (6) The advertisements shall remain in public attention at least for a week. Time limit for receipt of EOIs: 8. (1) A minimum of 7 days shall be provided to the companies for communicating their expression of interest in response to the advertisement aforesaid. (2) The Chairman, Nagaland P&NG Board, shall be responsible for answering queries from the intending companies, either directly or through a duly appointed Public Relations Officer of the Board, on phone, on web and in person. Whom to address EOIs and Undertaking: 9. (1) Every expression of interest by a company shall be addressed to the Chairman of the Board in a sealed cover and delivered to him or his office by any means but well before the date and time appointed for receipt of the EOIs. (2) Every expression of interest by a Company shall contain, (i) an undertaking that the Company has thoroughly read, understood and will comply with the Regulations and these Rules; (ii) an undertaking to set up an exclusive corporate Head Office in Nagaland with separate Accounts for Operations in the State with a corporate ethics of allowing easy access of the land owners, 4
representatives of the Naga Hoho/ENPO and respective tribal Hoho(s) and others affected by the operations, to top management at the said exclusive Head Office; and (iii) an undertaking that the company shall bind itself to the Naga customary practices of the respective tribes as required under Regulation No. 22. (3) An expression of interest that does not contain the above undertakings shall be rejected in limine on the date of opening of the expression of interest. Opening of EOIs: 10. (1) The public advertisement aforesaid shall appoint a date for opening the EOIs which shall be within 3 days of the last date of receipt of EOIs. (2) On the appointed day, the EOIs shall be opened by the Chairman of the Board in the presence of the representatives of the companies who have sent the EOIs. (3) There shall be no objection to a representative of a company having a perusal of the EOI of another company, but in the presence of the Chairman of the Board and with his permission. (4) Each EOI shall be numbered and entered in a Register kept therefor. Forwarding of EOIs to MG: 11. (1) The Chairman of the Board shall examine each EOI with regard to the following and record his detailed comments: (a) (b) (c) (d) (e) (f) Whether the company has given the undertakings required to be given under these Rules, and if not, the Chairman shall reject the EOI and record his decision in this behalf; Whether the company which has sent the EOI, complies with the provisions in Regulation No. 12; Whether the company has the previous experience in the category of operations in respect of which, it has sent the EOI; Whether the company has any previous record of work in Nagaland and if so, whether it has an adverse track record or a good one, while conducting its operations in Nagaland in the past; Whether the company s financial and operational profile is conducive for undertaking operations in Nagaland; and Whether the company has a running litigation with the Government of Nagaland. (2) After recording his comments as aforesaid on the above questions, the Chairman of the Board shall forward, in original, all the EOIs with such comments of him, to the MG. 5
(3) The comments of the Chairman of the Board shall not be in the nature of accepting or rejecting any company, except objective answers to the questions as enumerated above and except the rejection for not giving an undertaking as aforesaid. Preliminary scrutiny by MG: 12. (1) As soon as the EOIs with the comments of the Chairman of the Board have been received, the Chairman of MG shall convene a meeting of the MG, where the EOIs shall be considered in depth. (2) The President of the Naga Hoho, the President of the ENPO and the Presidents of the respective Tribal Hoho(s) of the zone(s) concerned may be invited as special invitees to the meeting. (3) A record of the meeting shall be kept by the Member Secretary. Collection of views from zone(s) 13. (1) The Chairman of the Board will request the President of the Naga Hoho/ENPO to obtain consent of the land owners in writing in the form of a no objection certificate for undertaking the operations. MG to finally decide: 14. (1) After receipt of the no objection certificate from the respective zone, the Chairman of MG shall convene a special meeting to consider the question of selection of company. (2) The decision of the MG, after such discussion, in regard to selection of company for awarding a permit to a company shall be final. Agreements to be signed: 15. (1) A decision of the MG to award a zone to a company for operations shall, as soon as may be, incorporated into an Agreement between the Chairman of the Board representing the State Government and the Chief Executive/Nominee of the company which shall be signed between them, in person, in the presence of the MG. (2) Besides the Agreements mentioned in Regulation No. 13 (3) & (4) and Regulation No.14 (5), immediately upon the signing of the Agreement under Regulation 14(5), another Agreement shall be signed between the land owners and the company for handing over the land for access to the company for the requisite period, with the village council concerned as witness, for undertaking production operations. Fees for Permits 16. The following fees, which are non refundable, shall be charged from the companies for issue of a permit for a particular operation in a zone: (i) New permit for pre production operation Rs. 1 crores per zone (ii) New permit for production operation Rs.2 crores per zone (iii) New permit for post production operation Rs. 2 crores per zone (iv) New permit for mixed operations Rs. 3 crores per zone 6
(v) For fresh issue of a permit which ceased Rs. 10 lakhs to operate under the Regulations (vi) For renewal of a valid permit Same fee as for issue of a new permit. List of Land Owners: 17. (1) As soon as the zones have been earmarked and published in the Official Gazette of Nagaland and after a request thereof is made by the Chairman of the Board, the Deputy Commissioner concerned shall provide the Chairman of the Board with a detailed list of land owners of each category as mentioned in Regulation No. 4 read with Regulation No. 6(4) and Regulation No. 14., after a thorough but timely exercise in regard to ownership of the land in the zone(s) concerned, has been undertaken. (2) The Deputy Commissioner shall, before finalizing the list of Land Owners, shall consult, (i) the Village Councils; (ii) (iii) the Tribal Hohos concerned in the zone; and also the representatives of the company to which the zone has been awarded. (3) All disputes in relation to the List shall be settled by the Chairman of the Board in consultation with the Tribal Hoho(s). (4) Appeals shall lie to the MG, which shall dispose them of, after consulting the Naga Hoho/ENPO. (5) Lists of Land Owners in respect of each zone shall be published in the Official Gazette of Nagaland. (6) Corrections, if any, to errors in the List may be issued and the same may be published in the Official Gazette. (7) List of Land Owners in a zone shall be issued in the name of the Chairman of the Board, who shall maintain an authenticated copy of the List for payment of land access fees and revenue share. No double payment of Land Access Fees: 18. If the land of a land owner is involved in both pre production and post production operations by a company in a zone, to the extent of the land affected by the overlapping, the land owner shall be entitled to only one land access fee either for the pre production operation or for the post production operation and not for both, as per choice of the land owner. Land Access Fee: 19. (1) The rates of land access fee payable to the land owners for pre production and post production operations in respect of each zone shall be notified in Official Gazette of Nagaland and different rates for these two operations may, if required, be notified. 7
(2) While determining the rates, the Chairman of the Board, shall consult the Deputy Commissioner(s) concerned, the Naga Hoho/ENPO, the Tribal Hoho(s) concerned and, if necessary, the representatives of the company concerned. (3) Before notifying the rates, the Chairman of the Board shall take the approval of the MG, whose decision shall be final. (4) The company shall credit the land access fee due to each land owner within the time limit provided in Regulation No. 13(2) as one consolidated amount into the Government of Nagaland account specially created for the purpose. (6) The Chairman of the Board shall pay into the accounts of each land owner the amounts shown in the statement as payable to him/her/it as land access fees, within 7 days of receipt of the moneys from the company concerned. (6) The Chairman of the Board shall be responsible for maintenance of records relating to Lists of Land Owners, rates of land access fees approved, details of disputes and their settlement etc., (7) All disputes relating to payment or non payment of moneys in this behalf by the company and to the land owners shall be dealt with by the Board at special sittings convened for the purpose during which the President of the Naga Hoho/ENPO and the Presidents of the Hohos of the zone(s) concerned shall assist the Board. (8) Appeals shall lie to the MG, which shall dispose of them as expeditiously as possible. P & NG Index for Revenue Share: 20. (1) The index proposed by the company in its Expression of Interest, that has been accepted for award of permit to the company concerned, shall be the index to which the revenue share formula in Regulation No.14 shall be pitched: Provided that the MG and the Board shall examine in all seriousness the comparative benefits of various indices before accepting the index proposed by the company in the EOI. (2) However, for valid reasons, in the mid course, the Chairman of the Board, with the prior approval of the MG, specify by notification any other index, which is more beneficial to the land owners, and the company shall be bound to provide Revenue Share to the land owners on the basis of the revised index, failing which the Permit shall stand cancelled forthwith. (3) Before changing the index, an opportunity shall be given to the company to have its say in the matter, after which, a decision about the index shall be taken, which shall be binding. Revenue Share 8
21. (1) The company shall credit the Revenue Share due to each land owner within the time limit provided in Regulation No. 14(4) as one consolidated amount into the Government of Nagaland account specially created for the purpose. (2) The Chairman of the Board shall pay into the accounts of each land owner the amounts shown in the statement as payable to him/her/it as Revenue Share, within 7 days of receipt of the moneys from the company concerned. (3) The Chairman of the Board shall be responsible for maintenance of records relating to quantity of production of both petroleum and natural gas by a company, on a daily basis, to be converted into value in terms of the international index accepted, which are to be further compiled into a monthly record, for the purpose of calculating revenue shares due to each land owner at the end of every month and all other relevant particulars and details. (4) All disputes relating to payment or non payment of moneys in this behalf by the company and to the land owners shall be dealt with by the Board at special sittings convened for the purpose during which the President of the Naga Hoho/ENPO and the Presidents of the Hohos of the zone(s) concerned shall assist the Board. (5) Appeals shall lie to the MG, which shall dispose of them as expeditiously as possible. Interest for delay in payment by Company: 22. (1) Any delay to make payment to the State Government of the Land Access Fees or the Revenue Share due to the land owners in a zone as aforesaid and as prescribed in the Regulations by a company, shall invite a penal interest against it, at the rates charged for such principal amount by the State Bank of India in respect of default in recovery of business loans lent by it. (2) All such interest paid by the company shall be passed on to the land owners within 7 days of receipt of the interest amount into the Government of Nagaland account. Environmental Clearance to zones: 23. (1) The State Government s Department/Agency responsible for pollution and other environmental clearance within the territory of Nagaland, shall be the Department/Agency that shall grant a No Objection Certificate to a zone for undertaking operations under the Regulations and these Rules. (2) Before a zone is notified under these Rules, the No Objection Certificate shall be mandatory. Hoho(s) to play a lead role 24. (1) The Naga Hoho, the ENPO and the respective Tribal Hoho(s) shall have a lead role in maximizing economic benefits for the land owners, a sustainable development of the areas under operations and other infrastructural and commercial investments in the zones and the State as a whole. (2) The Hoho(s) shall have a primordial responsibility in adjudging the ground situation in the zone(s) and in serving as a link between the State Government and the land owners and village councils, so that the customary practices of the Nagas and the corporate practices of the companies are harmonized in the best way with the least detriment to each party. (3) The State Government shall provide all necessary support to the Naga Hoho, the ENPO and tribal Hoho(s) in all exercises under the Regulations and these Rules. 9
Prohibition of cash transactions: 25. All financial transactions under the Regulations and these Rules shall be carried out by banking instruments only. Authentication of orders/decisions: 26. All orders and decisions of the State Government under the Regulations and these Rules shall be signed by the Chairman of the Board or expressed in his name, and duly authenticated by him for record. Administrative Orders: 27. (1) The Chairman of the Board has power to issue Administrative Orders to cover contingencies for which both the Regulations and the Rules have no provision, with the approval of the MG, which shall be notified in the Official Gazette of Nagaland. (2) Such Administrative Orders shall invariably bear a serial number and date of issue, and shall be laid before the Nagaland Legislative Assembly, as soon as these are issued, which has the powers to modify or annul them. Sd/ (LALTHARA), IAS Chief Secretary to the Government of Nagaland No:GM 3/ONGC 35/2009 :: Dated Kohima the 7 th December 2012 Copy to: 1. The Secretary to the Governor of Nagaland, Raj Bhavan, Kohima. 2. The Addl. Chief Secretary to the Chief Minister, Nagaland, Kohima. 3. The OSD to the Chief Secretary, Nagaland, Kohima. 4. The Secretary to the Government of India, Ministry of Petroleum & Natural Gas, Shastri Bhavan, New Delhi 110001 for information. 5. The Secretary, Nagaland Legislative Assembly, Kohima 6. The Sr. PS to all Ministers/Parliamentary Secretary(s)/Advisors, Nagaland, Kohima. 7. All Addl. Chief Secretary(s)/Principal Secretary(s) Commissioner & Secretary(s), Nagaland, Kohima. 8. All HoDs, Nagaland, Kohima. 9. Guard file. (BENDANG LONGCHARI), IAS Secretary to the Government of Nagaland 10