THE STORY BEHIND THE STORY: WHY HAS THE GOVERNMENT MOVED AGAINST RELIANCE NOW?

PARANJOY GUHA THAKURTA
Friday, February 20,2015

Thakurta is an independent journalist, educator and documentary filmmaker. He is the lead author of "Gas Wars: Crony Capitalism and the Ambanis". He is also a member of the governing council of Common Cause, which is one of the litigants in the cases against Reliance in the Supreme Court. This is EXCLUSIVE for The Citizen.

 

NEW DELHI: The arrest by the Delhi police of a group of individuals accused of illegally obtaining confidential documents from the government of India's Ministry of Petroleum and Natural Gas, has revealed yet again how deep the corrupt nexus between business and politics runs in this country. Among those arrested are an employee of India's largest private corporate entity, Reliance Industries Limited, two so-called consultants, including a journalist, and junior government employees.

Who does not know that the bureaucracy leaks like a sieve? It is common knowledge that on payment of relatively small amounts as bribes, even the most "classified" of government papers and "valuable" files are available for photocopying or scanning. So what's new about this current episode of corporate espionage?

The first and most obvious aspect is that Prime Minister Narendra Modi and the Minister of State for Petroleum and Natural Gas Dharmendra Pradhan want to convey an impression that they are not overly supportive of the corporate conglomerate headed by the richest man in India, Mukesh Dhirubhai Ambani. Hence, the tough action by the police.

If indeed the Modi government is perceived as being excessively deferential towards the Reliance group, it would be severely attacked by the Aam Aadmi Party and its leader Arvind Kejriwal who has been repeatedly claiming over the last two years or thereabouts that the country is virtually run by Ambani and his cronies.

Representatives of companies and lobbyists have, for years, been getting secret government documents. The more pertinent question is why are they so keen at this juncture to get to know what senior bureaucrats in the Petroleum Ministry are deliberating on. There are at least four controversial issues relating to the ministry that come to mind.

The government has to decide what the premium will be on the price of natural gas obtained from discoveries that are termed "deep water" or "ultra deep water" discoveries. These could include the discoveries in the Krishna-Godavari (KG) basin that could be operated on by a contracting company led by Reliance.

Then there are three sets of contentious disputes relating to the Ambani-led group and the government that are either in court or in various stages of arbitration.

A public interest litigation petition pending in the Supreme Court has alleged that the government and Reliance conspired to lower gas production from a specific area in the KG basin and increase prices in contravention of particular provisions of a production sharing contract signed between the government and Reliance in April 2000.

The company says gas output has come down because of "geological surprises" but sections within the government, including the office of the Comptroller & Auditor General of India, have alleged that the private contractor did not dig enough wells nor explore the entire area it was supposed to explore as a consequence of which gas production has fallen way below anticipated levels.

Then there are pending arbitration proceedings on the imposition of penalties of nearly $2.4 billion (or nearly ₹15,000 crore) on the Reliance-led contracting company by the Petroleum Ministry in the form of "disallowance of cost recovery". Reliance is eligible to recover certain expenses incurred through sales of gas. But there is a dispute as to how much it is eligible to recover and the government has accused the company of recovering much more than what it is eligible to.

Finally, there is this unprecedented dispute between India's largest public sector company, the Oil and Natural Gas corporation (ONGC), and the country's biggest private company, Reliance Industries Limited (RIL), over allegations of theft of natural gas worth nearly US$ 5 billion or 30,000 crore from the KG basin.

The dispute between ONGC and RIL is currently under arbitration by a firm based in the US and discussions have reportedly reached an important stage.

It is clear that there would be a lot of interest on the government's thinking on these disputes and issues. And therefore, the huge "incentive" to obtain confidential documents.

It is hardly a secret that representatives of big business houses covertly fund political parties. It is also well known that much of the Indian corporate sector has been openly supporting PM Modi and the Bharatiya Janata Party.

There is speculation that the present government wants to create an impression that it is not beholden to the Reliance group even as PM Modi's proximity to Gautam Adani, who heads the Adani group of companies, continues to raise more than a few eyebrows.



comments powered by Disqus