The Oil Industry ( Development) Act,1974 was enacted following successive and steep increase in the international prices of crude oil and petroleum products since early 1973,when the need of progressive self-reliance in petroleum and petroleum based industrial raw materials assumed great importance.
 
Preamble to the Oil Industry (Development) Act clarifies that the purpose of the Act is to provide for the establishment of a Board for development of oil industry and for that purpose to levy duty of excise on crude oil and natural gas and for matters connected therewith.

The OIDB is body corporate having perpetual succession and a common seal, with power to acquire, hold and dispose of property, both movable and immovable, to the contract, and shall by the said name sue and be sued.For details please refer to OIDB Act No.47 of 1974.

 

Function of OIDB

6 (1)Subject to the provisions of this Act and the rules made thereunder, the Board shall render, in such manner, to such extent and on such terms and conditions as it may deem fit, financial and other assistance for the promotion of all such measures as are, in its opinion, conducive to the development of oil industry.

(2)   Without prejudice to the generality of the provisions of sub-section (1), the Board may    render assistance under that sub-section by-

(a)    making grants or advancing loans to any oil industrial concern or other person who is engaged or is to engage in any activity referred to in clause (k) of section 2;

(b)  guaranteeing on such terms and conditions as may be agreed upon loans raised by any oil industrial concern or other person which are repayable within a period not exceeding twenty-five years and are floated in the market or loans raised by an oil industrial concern or other person from any bank which is a scheduled bank, or a State co-operative bank, as defined in the Reserve Bank of India Act, 1934;

(c)   guaranteeing on such terms and conditions as may be agreed upon deferred payments due from any oil industrial concern or other person in connection with import of capital goods from outside India or in connection with purchase of capital goods within India by such concern or other person;

(d)  guaranteeing on such terms and conditions as may be agreed upon loans raised from, or credit arrangements made with, any bank or financial institution in any country outside India by any oil industrial concern or other person in foreign currency :

 

Provided that no such guarantee shall be given without the prior approval of the Central Government;

 

(e)      underwriting the issue of stock, shares, bonds, or debentures by any oil industrial concern and retaining as part of its assets any stock, shares bonds or debentures which it may have to take up in fulfillment of its obligations thereto;

(f)     acting as agent for the Central Government or, with its approval, for any overseas financial organization or credit agency in the transaction of any business with any oil industrial concern in respect of loans or advances granted, or debentures subscribed by the Central Government of such organization or agency;

(g)       subscribing to the stock or shares of any oil industrial concern;

(h)    subscribing to the debentures of any oil industrial concern repayable within a period not exceeding twenty-five years from the date on which they are subscribed to:

 

Provided that nothing contained in this clause shall be deemed to preclude the Board from subscribing to the debentures of any oil industrial concern, the amounts outstanding thereon may be convertible at the option of the Board into stock or shares of that concern within the period the debentures are repayable.

Explanation : In this clause, the expression “amounts outstanding thereon” used in relation to any loan or advance shall mean the principal, interest and other charges payable on such loan or advance as at the time when the amounts are sought to be converted into stock or shares.

 

(3)     Without Prejudice to the generality of the provisions of sub-section (1), the measures for the promotion of which the board may render assistance under that sub-section may include measures for or by way of –

(a)    Prospecting for an exploration of mineral oil within India (including the continental shelf thereof) or outside India;

(b)      The establishment of facilities for production, handling, storage and transport of crude oil;

(c)        Refining and marketing of petroleum and petroleum products;

(d)   The manufacture and marketing of petrochemicals and fertilizers;

(e)      Scientific, technological and economic research which could be, directly or indirectly, useful to oil industry;

(f)        Experimental or pilot studies in any field of oil industry;

(g)       Training of personnel, whether in India or outside, engaged or to be engaged in any field of oil industry, and such other measures as may be prescribed.

(4)      The Board may charge such fees or receive such commission as it may deem appropriate for any services rendered by it in the exercise of its functions.

(5)    The Board may transfer for consideration any instrument relating to loans or advances granted by it to any oil industrial concern or other person.

(6)     The Board may do all such things as may be incidental to or consequential upon the discharge of its functions under this Act.