People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 28

July 10, 2011


Govt’s Murky Nod to Cairn-Vedenta Deal


THE Petroleum & Natural Gas Workers Federation of India (PNGWFI) has vehemently condemned the central government’s approval to the Cairn-Vedanta deal. This is, according to the federation, yet another large-scale onslaught on the strategically important oil sector in order to facilitate the handover of control of the single biggest crude oil reserve of Mangala oilfield in Rajasthan, producing 2,40,000 barrels a day, to the Vedanta Resources.


In a statement issued from New Delhi on July 1, the PNGWFI said the Vedanta Resources is a UK based company with dubious reputation and having no expertise in oil exploration and production. Apart from divestment of equity of the oil PSUs, now oilfield specific offloading of equity has been given a green signal by the UPA-2 government, with the Cabinet Committee on Economic Affairs (CCEA) approving the notorious Cairn-Vedanta deal in its meeting chaired by the prime minister on June 30.  


At a time when the crude oil price is climbing sky-high and the government is severely hurting the common folk with repeated hikes in the prices of petrol, diesel, kerosene and cooking gas, the statement said the deal is a deadly economic blow to the country’s economy and people.


According to the PNGWFI, the Oil & Natural Gas Commission (ONGC) is holding 30 per cent participating interest in the Barmer (Rajasthan) oilfield and therefore it is the ONGC should have been allowed to honestly exercise its first right to acquire the share of Cairn in the oilfield. The federation has condemned the questionable refusal of the government to intervene in favour of the ONGC. The ‘over-valuation’ of Barmer asset is illogical in as much as the ONGC has been buying oilfields abroad with lesser production at higher prices.


The organisation has also pointed out that the UPA-2 government has embraced a huge revenue loss under the mechanism of profit sharing contract by declaring that the amount of Rs 18,000 crore in royalty and Rs 13,000 crore in cess are cost-recoverable.


In the meantime, more murky deals seem to be in the offing in our oil sector as the government is out to enable some foreign oil giants to make inroads into our oil industry. As per newspaper reports, the ONGC is holding talks with the British Gas and ENI, Italy to sell 30 per cent of its stake in a Krishna-Godavari DWN oil block. Moreover, the UPA-2 government has also been favouring the Reliance Industries Limited (RIL) by allowing it to sell 30 per cent stake of its oil and gas blocks in the country. Also, the RIL-British Petroleum deal is in sheer violation of the original terms of contract between the government and the company. 


In such a background, the federation has demanded a review of the government’s decision to approve the murky Cairn-Vedanta deal. It must make the ONGC acquire the Cairn’s stake in Mangala oilfield in Rajasthan in exercise of its “first right” as the major stakeholder in the field. The federation has also directed all its affiliates to mobilise workers to bring pressurise the government to concede the above demands.