Kejriwal declares war on RIL, Moily
Feb 11 2014 , New Delhi
Anti-graft dept told to probe gas price fixing
Kejriwal has ordered his government’s anti-corruption branch (ACB) that’s directly under his control to register criminal cases against Reliance Industries chairman Mukesh Ambani, petroleum minister Veerappa Moily and his predecessor Murli Deora following complaints of irregularities in the doubling of the prices of natural gas from the KG basin to $8.4 per mmBtu from April 1 this year.
The Delhi government decided to register a first information report (FIR) against Ambani, Moily, Deora and VK Sibal, former director-general of hydrocarbons (DGH) after several prominent citizens filed a complaint.
Briefing newsmen on Tuesday, Kejriwal claimed there were several ‘wrong doings’ in the gas price revision, creating an artificial shortage of gas, leading to increases in the costs of transport and electricity and prices of essential commodities.
Kejriwal also asked the government to keep in abeyance the decision to double the prices of natural gas till the ACB completed its probe.
He said increasing the price would have a cascading effect on the economy as the rates of transportation, power generation, fertilisers and food items would go up significantly.
“I am writing to the prime minister and oil minister to keep the decision in abeyance pending the probe. I will also request the prime minister to direct all ministries to cooperate with the probe,” Kejriwal said.
Moily mocked at Kejriwal’s charges and justified the price revision saying it was based on recommendations of an expert panel. Congress general secretary Ajay Maken said the Delhi government’s decision was ‘inspired by political vendetta.’ Maken said, “We are not against any inquiry and will let the law take its course.”
Former cabinet secretary TSR Subramaniam, former navy chief RH Tahiliani, former finance secretary EAS Sarma and noted lawyer Kamini Jaiswal had written to Kejriwal citing irregularities in gas pricing.
These four eminent citizens have alleged “collusion between Reliance and some ministers of the Union government.” They have said that in a direct fallout, transport, domestic gas and electricity prices will see a very big increase, making the “life of common man miserable”.
Once the new price becomes operative, it will cost the country Rs 54,500 crore every year. The decision ensures Reliance will make a windfall profit of Rs 1,20,000 crore in the near future.
The four citizens have said Reliance had signed long-term agreements with NTPC and RNRL to supply gas at $2.34 per mmBtu for 17 years. They have pointed to RIL’s partner in KG basin, Niko, which has a 25-year contract with the Bangl-adesh government to sell gas at $2.34 per mmBtu.
Reliance reacted by saying it would take legal recourse to protect its reputation, investments and denied all charges leveled against it by the Delhi government. It also expressed shock and dismay at the filing of an FIR against group chairman Mukesh Ambani.
The company said, “…Each of the allegations on the basis of which the Delhi government has taken such action is completely baseless and devoid of any merit or substance whatsoever.” Reliance also pointed to a petition being heard by the Supreme Court on allegations made by the same people. The court is expected to take a call on the petition on March 4.
While maintaining that gas pricing was a contentious issue between the contracting parties, the company said, “We deny these irresponsible allegations and propose to resort to the available legal remedies to protect our reputation and preserve the pioneering efforts and investment made by Reliance so far.”
Speaking to Financial Chronicle from Assam, Sibal said, “DGH during my tenure in 2005-09 had nothing do with the gas price revision. My name figuring in the probe has surprised and shocked me.”
Sibal also said DGH “did not have the financial expertise to deal with gas pricing issues. So, even remotely, DGH at that time was never part of the gas pricing mechanism.”
But the complaint that triggered the probe points out that DGH accepted Reliance’s proposal to increase capital costs by $6.3 billion in an unseemly haste.
Following the DGH approval of cost escalation, Reliance sold 30 per cent stake in 21 of 29 blocks to British Petroleum in July 2011 for $7.2 billion, thereby allowing the Ambani-led company to make a killing, once through the stake sale and again from cost and profit petroleum.
The Delhi government’s decision to order a probe and register corruption cases against Ambani, the two Union ministers and Sibal comes at a time when the Supreme Court is already hearing a case relating to gas prices. The complainants told Kejriwal that the UPA government shunted out two petroleum ministers, Mani Shankar Aiyar and S Jaipal Reddy, after they refused to fall in line with RIL on gas prices revision.
Subramaniam and the others pointed to the show-cause notices issued to Reliance and its chairman by the petroleum ministry under Jaipal Reddy “for wilful breach of the production sharing agreement.” This was done following legal opinion given then solicitor- general Rohinton Nariman.
Subramaniam, Sarma, Jaiswal and Tahiliani have also pointed to comptroller and auditor-general (CAG) report on KG basin gas fields to Parliament that “there is strong evidence that Reliance has gold-plated its capital expenditure and made unjust enrichment twice by overinvoicing the capital costs and ensuring that capital costs recovery took a longer time.”
Briefing newsmen, Kejriwal also alleged that Reliance did not produce adequate gas from the eastern offshore KG basin block so as to put pressure on the government to increase the price.