(Weekly Organ of the Communist Party of India (Marxist)
August 02, 200
Who is the Owner?
circumstances in the
pre-reform or pre-globalisation era, such a question would not have
years after the MoU, the
government of India wakes up from its ‘kumbhakarna’
slumber to complain that its property worth thousands of crores of
been usurped by the two brothers –– a
property which is a major energy source for electricity and fertilizer
gas-starved country. What was it doing all this time? The whole nation
agitated when Pakistani intruders sneaked into Kargil without the
the Vajpayee government ten years back. The intruders stealthily
150 sq km of Indian land in the inhospitable hilly terrain and they
subsequently thrown out by the Indian armed forces. Here, in this case,
broad daylight in the name of a production sharing contract, an Indian
industrial house openly treats 339 sq km in KG basin like its family
for four years and yet the sovereign government of
economic reforms were
initiated in the early nineties, ONGC and Oil India Ltd were the only
exploration and production companies, owned by the government of
· Quantity of 12 million metric standard cubic metres of gas per day (mmscmd) will be given to NTPC
· The next 28 mmscmd would go to RNRL
· The rest will be supplied in 60:40 ratio with 60 per cent to RIL and 40 per cent to RNRL
· The pricing of the gas was stipulated at 2.34 dollar/mmbtu (million British thermal unit)
The above MoU inter alia ignored the sovereign ownership of the government over KG gas on two major parameters viz allocation of gas and the pricing of the same. The government now admits in its Special Leave Petition (SLP) before the Supreme Court in its affidavit in July 2009 that rights of Union of India have been infringed for the following reasons:
That RIL and
RNRL cannot settle between themselves
as to how the gas, which is a national asset and a natural resource
in the government of India and which is to be utilized for the wider
interest of the nation, is to be distributed. It is not the private
RIL and RNRL and any understanding arrived at between them is not
the government of
· The gas has to be distributed in terms of the government-approved Gas Utilisation Policy and at a price approved by the government.
But then why, after four years?
HIDE & SEEK GAME
BY THE UPA GOVT
The government now says that it became aware of the MoU only after the relevant portion of the MoU was placed before the Mumbai High Court in October 2008 in course of the litigation between the brothers.
It is absolutely untrue. On April 14, 2006 RIL approached the Ministry of Petroleum & Natural Gas (MOPNG) seeking the approval of the sale of gas to RNRL at 2.34 dollar/mmbtu and RNRL sent a letter on the same subject to the government on May 09, 2006. In between, on May 04, 2006 the then CPI(M) MP, late Chittabrata Majumdar sought the intervention of the minister of petroleum and natural gas in the matter. The relevant extract of the letter is quoted here:
RIL has recently signed a Gas Sale Purchase Agreement
(GSPA) with Reliance Natural Resources Ltd (RNRL) without any bidding
competitive arms length process, to supply gas at a contracted price of
dollar per mmbtu whereas currently India
imports gas from Qatar at an estimated price of 6 dollar/mmbtu. RIL by this agreement with
RNRL is going to supply gas cheaply, that too as large a quantity as 40
mmscmd (current total domestic gas
availably for customers in the country is 72 mmscmd). RIL is,
seeking to transfer the benefit of gas find to a related private
company at a
cheaper price…..This benefit should actually flow to the people by
Article 297 of the Constitution of
“I, therefore, request you to kindly intervene so that natural gas from KG basin explored by RIL, is auctioned through competitive bidding and the government can utilise the gas-find through GAIL which can set up its own pipeline for transportation and consumption of gas in power and industrial sector as a part of overall energy security and regional balance.”
The letter was acknowledged on May 25, 2006.
The government was therefore never in dark when the KG basin gas became all of a sudden a family affair. In fact, the government has both overtly and covertly encouraged a settlement between the squabbling siblings at the cost of surrendering its ownership right on the natural gas. Otherwise, it would have intervened on behalf of NTPC, the government-owned power generation company whose 2700 MW gas based thermal projects (Kawas and Gandhar) are kept on hold because of RIL’s refusal to supply them the required gas. That is another part of the hide and seek game being indulged by the UPA government.
The government of India so far has been more concerned about the pricing of gas than about asserting its ownership rights on the same. Why? Because, gas pricing of 2.32 dollar/mmbtu in the June 2005 MoU, signed between the two siblings, was based on the gas price offered by RIL and accepted by NTPC in June 2004. In a written reply to a question dated February 20, 2009 in Lok Sabha the then minister of state for power, Jairam Ramesh stated:
“NTPC invited bids under international competitive bidding for procurement of natural gas amounting to 132 trillion British thermal units per annum for Kawas-II and Gandhar-II power projects for a period of 17 years. Reliance Industries was evaluated as the lowest techno commercially acceptable bidder and NTPC accepted its offer. Accordingly a Letter of Intent (LOI) was issued to RIL on June 16, 2004 which was duly acknowledged and confirmed by RIL.”
RIL’s bid was for supply of 12 mmscmd of gas from KG basin at 2.34 dollar/mmbtu to NTPC for 17 years. What happened thereafter? This is what Jairam Ramesh explained in the aforesaid reply in parliament:
“After the issuance of LOI, RIL did not come forward to sign the Gas Sale and Purchase Agreement (GSPA) and sought major changes in the agreed draft of GSPA. NTPC pursued with RIL at various levels and various meetings to sign the GSPA, as per the draft accepted by RIL during the bidding process. However inspite of all the efforts by NTPC, RIL did not sign the GSPA agreed during the bidding process.”
At various levels? Which level? Did the MOPNG, as a nodal ministry of the government that now asserts its ownership on KG basin, intervene and ask the contractor i.e. RIL to supply gas to the government-owned company as per the agreed terms so that 2700 MW of power is made available by NTPC to the people of this country? No. Instead, an aggrieved NTPC filed a suit in the Bombay High Court on December 20, 2005 against RIL’s refusal to sign the GSPA. The case is still sub judice and 2700 MW power – much cheaper than the much tom-tommed nuclear power – remains elusive.
In the litigation between RIL and RNRL, earlier in Bombay High Court and now in the Supreme Court, the government of India rushes to act as a mediator. This alacrity is glaringly absent on the part of the government in the litigation between its own company NTPC and RIL, which involves providing power to the aam admi. The UPA government was eloquently silent and did not support the NTPC even for once during the last four years. On the contrary, in one of the rarest case of deceit and deception, it weakened the case of NTPC by forming an Empowered Group of Ministers on September 12, 2007, which fixed the gas price at 4.2. dollar/mmbtu –- an arbitrarily determined high price that RIL had been bargaining for all along.
If this is the price of gas approved by the government, where does NTPC’s case stand? By indirectly sabotaging the NTPC’s case, the government has at one stroke hiked the price of power and fertiliser – both key inputs in the grim agrarian sector. The public sector company, ONGC, presently supplies gas to NTPC, another PSU, at 1.8 dollar/mmbtu. The neo-Congress leaders of UPA government, who relentlessly chant the mantra of “people’s ownership” to justify their disinvestment, want the same gas owned by the people of this country to be contracted to a private family by the government who would then extract 21/2 times more price at people’s expense!
Clearly, it is high time the government must come clean on this issue. Now it has belatedly but rightly asserted that KG basin gas is government’s property. Better late than never. Let them act on what they have asserted i.e. people’s ownership of KG basin gas which does not belong to a family – divided or undivided. The first follow up step to act on people’s ownership is to take over the distribution and marketing rights of gas at the delivery end from RIL which has violated the PSC by unilaterally assigning to itself the power of an owner. The next step is to entrust Gas Authority of India Limited (GAIL) with the responsibility of transportation, distribution and marketing of KG basin gas. This will be in line with para 2.4 of the union cabinet note for formation of GAIL in January 1984 which stated “In the course of time, it is visualised that national grid of gas pipeline will have to be developed, having regard to gas availability, utilisation pattern and the capital investment involved.” The idea was clear – ONGC, OIL and GAIL, owned by people of India, will produce and distribute natural gas, a major energy source to ensure regional balance and allocation to priority sectors. The UPA government has abandoned that path. “People’s ownership” does not mean selling of PSU shares in share market. It means assertion of State control of vital natural resources like gas, owned by the people of this country and not by one corporate or other, in the interest of aam admi.