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Corporate funding of elections, RIL, companies & political parties

Written By Gopal Krishna on Thursday, February 13, 2014 | 1:42 AM

Note: Following ongoing campaign by CPI and CPIM leaders Gurudas Dasgupta, Tapan Sen and the complaint by E A S Sarma, TSR Subrmanian, Admiral Tahiliani and Kamini Jaiswal, Delhi government's Anti-Corruption Branch is to probe the matter under relevant provisions of the Prevention of Corruption Act for indulging in corrupt practices in fixing natural gas price. The FIR, with the Delhi Anti-Corruption Branch, was registered on the night of February 11, 2014.

In the complainant petroleum minister Veerappa Moily, RIL chairman Mukesh Ambani, former minister Murli Deora and former director general of Hydrocarbons VK Sibal have been named in alleged irregularities in the pricing of natural gas from KG Basin. The FIR is registered under Sections 420, 120 B and 13 (1)(c)(d) of the Prevention of Corruption Act.
The FIR states, “Since the decision to operate from 1.4.2014, which is around the time the term of the present government expires, the government ought to have left the decision to the new government, since it involves serious considerations, inflationary consequences, and a massive increase in subsidy burden. The fact that this decision was taken in advance by the present government shows that it wanted to favour RIL for corrupt considerations, which would then help with the expenditure for the upcoming national elections. This is also the reason why the main Opposition party, the BJP, is silent on the issue, as during election time when huge slush of funds is required by the major parties, no one is willing to speak against this decision, even though price rise is normally an important political issue.” 
Delhi Chief Minister Arvind Kejriwal alleged that the policy makers colluded to inflate the prices of gas produced from KGD6 block. Reliance was being allowed to windfall gains and that the cost of production was less than USD 1 per barrel.  

There are at least two PILs in this regard in the Supreme Court which has fixed March 4 for hearing it. One is by Gurudas Dasgupta and the other is by Prashant Bhushan of Aam Aadmi Party.  

ToxicsWatch Alliance (TWA) has copies of the correspondence E A S Sarma had with the silent Prime Minister in this regard. Notably, Chief Minister of Andhra Pradesh had also written to Government of India questioning the original price fixation methodology. 

Prime Minister should break his silence to clear the air as to whether the government and RIL had colluded to double the gas prices to $8 per million British thermal unit (mBtu) from April 1, 2014.

Unless provisions of Companies Act, 2013 that provide for corporate funding to political parties is removed such qui pro quo will never be stopped. Today it is one company, tomorrow there will be another company. 


The legal provision for corporate funding for political parties was introduced in 2002-3 by amending Companies Act, 1956 and other related laws wherein they could donate up to 5 % of their annual profit to political parties.

Is it surprising then that as a consequence there has been a tax waiver of Rs 30 lakh crore by UPA Government during the last 9 years?

Will it not facilitate the 'commercial czars' in swallowing up not only the economy but also the democratic rights by turning citizens into subjects through their proposed 'private territorial army'?  

Hasn't this corporate contribution ensured that world's biggest Central Industrial Security Force (CISF) which is now available for hire after Parliament subjugated by 'commercial czars' authorised the provision of CISF security to private acorporate establishments across the country for a fee with the passage of the CISF (Amendment) Bill, 2008 on 25 February 2009?     

One used to hear that Asif Ali Zardari was called Mr 10 % during Benazir Bhutto's regime. Radia tapes revealed that there is a Mr 10 % in UPA Government too. Now all the political parties have turned themselves into 7.5 % Club. Parliament can legalize any illegitimate act but does that make legitimate.

Did corporate support for Emergency from industrialists like J. R. D. Tata  make it legal and legitimate?

The way Thirty-ninth Amendment to the Constitution was illegal and illegitimate for placing election of Prime Minister beyond the scrutiny of judiciary, in the same way provision for corporate funding for political parties in The Companies Bill is illegal and illegitimate.
If corporate donation directly to political parties is justified then why stop at 7.5 %, how about having a 50-50 partnership! 

The complicit silence of the opposition parties in this regard is deafening.  If this is not collusion between Congress & BJP what else is it.  The Act passed by Parliament provides for a quid pro quo relationship between the political parties and the companies.



Can the political class consider endorsing The Contesting Election on Government Expenses Bill, 2012 introduced by BJP MP Prabhat Jha which is pending in the Rajya Sabha ahead of the 2014 elections?  AAP and left parties can canvass for it to address the root causes? 


Gopal Krishna
ToxicsWatch Alliance (TWA)


After 8-month fight, some cheer for Gurudas Dasgupta
Nearly eight months ago when he began writing letters to PM Manmohan Singh drawing his attention to a scam in the Reliance's KGD6 gas field, most media organizations dismissed it as a communist's routine angst. The PMO sent him customary acknowledgments. The last such missive was sent on January 31 alleging that an honest RN Choubey, DG, Hydrocarbons, had been removed to oblige Reliance. 
On Tuesday, Dasgupta seemed happy. "I support Kejriwal's point," he said. His eyes are set on March 4, when SC will hear his PIL against RIL. "I'll continue my fight against RIL in court independent of what Kejriwal is doing." 

Having spent nearly three decades in Parliament, Dasgupta has decided to hang up his gloves. He has seen enough petroleum ministers. "RIL always chooses petroleum ministers, except twice," he said, refusing to specify the two occasions the company did not have its way. Those familiar with him know he meant Jaipal Reddy and Mani Shankar Aiyar. 

Dasgupta said he's on the side of truth and added the "hike in gas price is a gift to RIL". He said every government body and senior ministry officials, had pointed out how RIL flouts rules but "Veerappa Moily is defending the company." 

The proposal to raise gas prices from $4 to $8, he said, was opposed by many in the Cabinet like Reddy and Jairam Ramesh. "Even CAG said RIL violated the contract. I got a DGH report that said RIL had not sunk the number of wells it was obliged to under contract. RIL is not relinquishing the area not being used. Deliberately they were cutting production to force government to increase the price," he said. 
On Tuesday, Dasgupta seemed happy. "I support Kejriwal's point," he said. His eyes are set on March 4, when SC will hear his PIL against RIL. "I'll continue my fight against RIL in court independent of what Kejriwal is doing." 
Having spent nearly three decades in Parliament, Dasgupta has decided to hang up his gloves. He has seen enough petroleum ministers. "RIL always chooses petroleum ministers, except twice," he said, refusing to specify the two occasions the company did not have its way. Those familiar with him know he meant Jaipal Reddy and Mani Shankar Aiyar. 

Dasgupta said he's on the side of truth and added the "hike in gas price is a gift to RIL". He said every government body and senior ministry officials, had pointed out how RIL flouts rules but "Veerappa Moily is defending the company." 

The proposal to raise gas prices from $4 to $8, he said, was opposed by many in the Cabinet like Reddy and Jairam Ramesh. "Even CAG said RIL violated the contract. I got a DGH report that said RIL had not sunk the number of wells it was obliged to under contract. RIL is not relinquishing the area not being used. Deliberately they were cutting production to force government to increase the price," he said. 
Having spent nearly three decades in Parliament, Dasgupta has decided to hang up his gloves. He has seen enough petroleum ministers. "RIL always chooses petroleum ministers, except twice," he said, refusing to specify the two occasions the company did not have its way. Those familiar with him know he meant Jaipal Reddy and Mani Shankar Aiyar. 
Dasgupta said he's on the side of truth and added the "hike in gas price is a gift to RIL". He said every government body and senior ministry officials, had pointed out how RIL flouts rules but "Veerappa Moily is defending the company." 

The proposal to raise gas prices from $4 to $8, he said, was opposed by many in the Cabinet like Reddy and Jairam Ramesh. "Even CAG said RIL violated the contract. I got a DGH report that said RIL had not sunk the number of wells it was obliged to under contract. RIL is not relinquishing the area not being used. Deliberately they were cutting production to force government to increase the price," he said. 
Dasgupta said he's on the side of truth and added the "hike in gas price is a gift to RIL". He said every government body and senior ministry officials, had pointed out how RIL flouts rules but "Veerappa Moily is defending the company." 
The proposal to raise gas prices from $4 to $8, he said, was opposed by many in the Cabinet like Reddy and Jairam Ramesh. "Even CAG said RIL violated the contract. I got a DGH report that said RIL had not sunk the number of wells it was obliged to under contract. RIL is not relinquishing the area not being used. Deliberately they were cutting production to force government to increase the price," he said. 
The proposal to raise gas prices from $4 to $8, he said, was opposed by many in the Cabinet like Reddy and Jairam Ramesh. "Even CAG said RIL violated the contract. I got a DGH report that said RIL had not sunk the number of wells it was obliged to under contract. RIL is not relinquishing the area not being used. Deliberately they were cutting production to force government to increase the price," he said. 
All about the Reliance-KG Basin controversy
September 20, 2011
The report, presented in Parliament on September 8, 2011, was muted than the draft - fi rst reported by TOI on June 13 that year. This had said there could be a loss to the exchequer but couldn't quantify it. On June 14 and June 22 TOI also reported how the draft report showed contract costs rising phenomenally because of RIL's sweetheart procurement deals. But the fi nal report criticized the oil ministry and its technical arm, DGH, for allowing RIL to hold on to the entire block when it was to have surrendered 25% of the area. 

The ministry, then under Murli Deora, ordered the special CAG audit of three fields operated by private entities after Samajwadi Party alleged RIL had jacked up capital investments in KG-D6 Block. 

RIL had initially sought approval for a $2.4-billion investment plan, projecting an output of 60 million units per day. It revised the plan to $8.8 billion, projecting an output of 80 million units. 

While investments don't have a direct bearing on oil or gas prices, they impact the government's take from a field. The present format of contract, followed in many countries, allows companies to recover costs before sharing profit with the government in a graded manner. 

On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 

The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 

A chastised ministry under S Jaipal Reddy slapped a $1.8 billion penalty on RIL for the output drop, refusing to allow it to recover this amount of investment. They are locked in arbitration. 

Under M Veerappa Moily, the ministry has also taken back some discoveries, amounting to 25% of the block, and ordered that RIL would get the revised gas price only if it submits a bank guarantee, estimated at $1.2 billion, to cover the quantity by which it has fallen short of its supply commitment. 
The report, presented in Parliament on September 8, 2011, was muted than the draft - fi rst reported by TOI on June 13 that year. This had said there could be a loss to the exchequer but couldn't quantify it. On June 14 and June 22 TOI also reported how the draft report showed contract costs rising phenomenally because of RIL's sweetheart procurement deals. But the fi nal report criticized the oil ministry and its technical arm, DGH, for allowing RIL to hold on to the entire block when it was to have surrendered 25% of the area. 
The ministry, then under Murli Deora, ordered the special CAG audit of three fields operated by private entities after Samajwadi Party alleged RIL had jacked up capital investments in KG-D6 Block. 

RIL had initially sought approval for a $2.4-billion investment plan, projecting an output of 60 million units per day. It revised the plan to $8.8 billion, projecting an output of 80 million units. 

While investments don't have a direct bearing on oil or gas prices, they impact the government's take from a field. The present format of contract, followed in many countries, allows companies to recover costs before sharing profit with the government in a graded manner. 

On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 

The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 

A chastised ministry under S Jaipal Reddy slapped a $1.8 billion penalty on RIL for the output drop, refusing to allow it to recover this amount of investment. They are locked in arbitration. 

Under M Veerappa Moily, the ministry has also taken back some discoveries, amounting to 25% of the block, and ordered that RIL would get the revised gas price only if it submits a bank guarantee, estimated at $1.2 billion, to cover the quantity by which it has fallen short of its supply commitment. 
The ministry, then under Murli Deora, ordered the special CAG audit of three fields operated by private entities after Samajwadi Party alleged RIL had jacked up capital investments in KG-D6 Block. 
RIL had initially sought approval for a $2.4-billion investment plan, projecting an output of 60 million units per day. It revised the plan to $8.8 billion, projecting an output of 80 million units. 

While investments don't have a direct bearing on oil or gas prices, they impact the government's take from a field. The present format of contract, followed in many countries, allows companies to recover costs before sharing profit with the government in a graded manner. 

On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 

The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 

A chastised ministry under S Jaipal Reddy slapped a $1.8 billion penalty on RIL for the output drop, refusing to allow it to recover this amount of investment. They are locked in arbitration. 

Under M Veerappa Moily, the ministry has also taken back some discoveries, amounting to 25% of the block, and ordered that RIL would get the revised gas price only if it submits a bank guarantee, estimated at $1.2 billion, to cover the quantity by which it has fallen short of its supply commitment. 
RIL had initially sought approval for a $2.4-billion investment plan, projecting an output of 60 million units per day. It revised the plan to $8.8 billion, projecting an output of 80 million units. 
While investments don't have a direct bearing on oil or gas prices, they impact the government's take from a field. The present format of contract, followed in many countries, allows companies to recover costs before sharing profit with the government in a graded manner. 

On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 

The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 

A chastised ministry under S Jaipal Reddy slapped a $1.8 billion penalty on RIL for the output drop, refusing to allow it to recover this amount of investment. They are locked in arbitration. 

Under M Veerappa Moily, the ministry has also taken back some discoveries, amounting to 25% of the block, and ordered that RIL would get the revised gas price only if it submits a bank guarantee, estimated at $1.2 billion, to cover the quantity by which it has fallen short of its supply commitment. 
While investments don't have a direct bearing on oil or gas prices, they impact the government's take from a field. The present format of contract, followed in many countries, allows companies to recover costs before sharing profit with the government in a graded manner. 
On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 

The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 

A chastised ministry under S Jaipal Reddy slapped a $1.8 billion penalty on RIL for the output drop, refusing to allow it to recover this amount of investment. They are locked in arbitration. 

Under M Veerappa Moily, the ministry has also taken back some discoveries, amounting to 25% of the block, and ordered that RIL would get the revised gas price only if it submits a bank guarantee, estimated at $1.2 billion, to cover the quantity by which it has fallen short of its supply commitment. 
On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 
The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 

A chastised ministry under S Jaipal Reddy slapped a $1.8 billion penalty on RIL for the output drop, refusing to allow it to recover this amount of investment. They are locked in arbitration. 

Under M Veerappa Moily, the ministry has also taken back some discoveries, amounting to 25% of the block, and ordered that RIL would get the revised gas price only if it submits a bank guarantee, estimated at $1.2 billion, to cover the quantity by which it has fallen short of its supply commitment. 
The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 
A chastised ministry under S Jaipal Reddy slapped a $1.8 billion penalty on RIL for the output drop, refusing to allow it to recover this amount of investment. They are locked in arbitration. 

Under M Veerappa Moily, the ministry has also taken back some discoveries, amounting to 25% of the block, and ordered that RIL would get the revised gas price only if it submits a bank guarantee, estimated at $1.2 billion, to cover the quantity by which it has fallen short of its supply commitment. 
A chastised ministry under S Jaipal Reddy slapped a $1.8 billion penalty on RIL for the output drop, refusing to allow it to recover this amount of investment. They are locked in arbitration. 
Under M Veerappa Moily, the ministry has also taken back some discoveries, amounting to 25% of the block, and ordered that RIL would get the revised gas price only if it submits a bank guarantee, estimated at $1.2 billion, to cover the quantity by which it has fallen short of its supply commitment. 
Under M Veerappa Moily, the ministry has also taken back some discoveries, amounting to 25% of the block, and ordered that RIL would get the revised gas price only if it submits a bank guarantee, estimated at $1.2 billion, to cover the quantity by which it has fallen short of its supply commitment. 
The report, presented in Parliament on September 8, 2011, was muted than the draft - fi rst reported by TOI on June 13 that year. This had said there could be a loss to the exchequer but couldn't quantify it. On June 14 and June 22 TOI also reported how the draft report showed contract costs rising phenomenally because of RIL's sweetheart procurement deals. But the fi nal report criticized the oil ministry and its technical arm, DGH, for allowing RIL to hold on to the entire block when it was to have surrendered 25% of the area. 
The ministry, then under Murli Deora, ordered the special CAG audit of three fields operated by private entities after Samajwadi Party alleged RIL had jacked up capital investments in KG-D6 Block. 

RIL had initially sought approval for a $2.4-billion investment plan, projecting an output of 60 million units per day. It revised the plan to $8.8 billion, projecting an output of 80 million units. 

While investments don't have a direct bearing on oil or gas prices, they impact the government's take from a field. The present format of contract, followed in many countries, allows companies to recover costs before sharing profit with the government in a graded manner. 

On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 

The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 
The ministry, then under Murli Deora, ordered the special CAG audit of three fields operated by private entities after Samajwadi Party alleged RIL had jacked up capital investments in KG-D6 Block. 
RIL had initially sought approval for a $2.4-billion investment plan, projecting an output of 60 million units per day. It revised the plan to $8.8 billion, projecting an output of 80 million units. 

While investments don't have a direct bearing on oil or gas prices, they impact the government's take from a field. The present format of contract, followed in many countries, allows companies to recover costs before sharing profit with the government in a graded manner. 

On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 

The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 
RIL had initially sought approval for a $2.4-billion investment plan, projecting an output of 60 million units per day. It revised the plan to $8.8 billion, projecting an output of 80 million units. 
While investments don't have a direct bearing on oil or gas prices, they impact the government's take from a field. The present format of contract, followed in many countries, allows companies to recover costs before sharing profit with the government in a graded manner. 

On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 

The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 
While investments don't have a direct bearing on oil or gas prices, they impact the government's take from a field. The present format of contract, followed in many countries, allows companies to recover costs before sharing profit with the government in a graded manner. 
On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 

The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 
On gold-plating of costs, the CAG said: "Since approval of estimates does not constitute acceptance of the cost of projections of the operator. Validating the cost incurred by him can be done only after audit of the actual cost through proper norms." 
The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 
The drastic gas output fall has brought RIL's operations and investments into question. The company has invested upwards of $10 billion in the block's exploration and development, while it has recovered over $5.6 billion in costs. 
"The gas is mine," Jaipal Reddy told Mukesh Ambani during one of about half-a-dozen meetings the plain speaking political veteran had with him. 
Ambani was always polite but the meetings remained inconclusive, Reddy unable to accept the Reliance demand to double of the price of KG Basin gas. As oil minister, Reddy insisted on a full account of RIL's inability to deliver on contracted supply of gas and wasn't willing to accept what his officials said would be a $6.3-billion bill for acceding to RILdemands. 
Reddy was ready to bear what he said was a moderate loss, but remained skeptical of RIL's claim that a drop in gas production was because of "geological reasons" though Ambani denied any deliberate intent. 
With meetings sometimes stretching hours, Reddy made the point that gas is sovereign property and RIL was only contracted to extract it and needed to realize it could not fi x prices as if it owned the resource. Reddy had a point, but he would have known that no bets would be placed on the odds of his winning the battle with the petrochemical giant, given Reliance's legendary clout in governments of all hues. 
A brief phone call from PM Manmohan Singh in October 2012 informed Reddy that his portfolio was being changed. This didn't come as a surprise: He was the latest of many who had experienced RIL's clout. 
Before him, during the UPA 1 tenure, Mani Shankar Aiyer also had a run in with RIL. Though there were more than one reason for his exit as oil minister, his spat with the leading business house did not help his case. 
Reddy accepted the portfolio change but it left him fuming and some seven months later he stubbornly and eloquently argued against hiking gas price to $8.4 a unit from $4.2. At the Cabinet meeting that lasted more than 100 minutes, Reddy argued there is no fi nancial or geological basis to the decision. 
His argument that the government's expectation that an increase in gas prices will spur investment and reduce imports are ill founded was supported by rural development minister Jairam Ramesh. Ramesh is understood to have said that while the government is offering incentive pricing, the prospects of gas were unverified. "The outgo is certain, the prospects are uncertain," Reddy is understood to have said. 
Power minister Jyotiraditya Scindiachipped in, saying a price hike will mean a rise in the cost of power; the outgo on power and fertilizer is billed at $6 billion (over Rs 36,000 crore).
Reddy was ready to bear what he said was a moderate loss, but remained skeptical of RIL's claim that a drop in gas production was because of "geological reasons" though Ambani denied any deliberate intent. 
With meetings sometimes stretching hours, Reddy made the point that gas is sovereign property and RIL was only contracted to extract it and needed to realize it could not fi x prices as if it owned the resource. Reddy had a point, but he would have known that no bets would be placed on the odds of his winning the battle with the petrochemical giant, given Reliance's legendary clout in governments of all hues. 
A brief phone call from PM Manmohan Singh in October 2012 informed Reddy that his portfolio was being changed. This didn't come as a surprise: He was the latest of many who had experienced RIL's clout. 
Before him, during the UPA 1 tenure, Mani Shankar Aiyer also had a run in with RIL. Though there were more than one reason for his exit as oil minister, his spat with the leading business house did not help his case. 
Reddy accepted the portfolio change but it left him fuming and some seven months later he stubbornly and eloquently argued against hiking gas price to $8.4 a unit from $4.2. At the Cabinet meeting that lasted more than 100 minutes, Reddy argued there is no fi nancial or geological basis to the decision. 
His argument that the government's expectation that an increase in gas prices will spur investment and reduce imports are ill founded was supported by rural development minister Jairam Ramesh. Ramesh is understood to have said that while the government is offering incentive pricing, the prospects of gas were unverified. "The outgo is certain, the prospects are uncertain," Reddy is understood to have said. 
Power minister Jyotiraditya Scindiachipped in, saying a price hike will mean a rise in the cost of power; the outgo on power and fertilizer is billed at $6 billion (over Rs 36,000 crore).
With meetings sometimes stretching hours, Reddy made the point that gas is sovereign property and RIL was only contracted to extract it and needed to realize it could not fi x prices as if it owned the resource. Reddy had a point, but he would have known that no bets would be placed on the odds of his winning the battle with the petrochemical giant, given Reliance's legendary clout in governments of all hues. 
A brief phone call from PM Manmohan Singh in October 2012 informed Reddy that his portfolio was being changed. This didn't come as a surprise: He was the latest of many who had experienced RIL's clout. 
Before him, during the UPA 1 tenure, Mani Shankar Aiyer also had a run in with RIL. Though there were more than one reason for his exit as oil minister, his spat with the leading business house did not help his case. 
Reddy accepted the portfolio change but it left him fuming and some seven months later he stubbornly and eloquently argued against hiking gas price to $8.4 a unit from $4.2. At the Cabinet meeting that lasted more than 100 minutes, Reddy argued there is no fi nancial or geological basis to the decision. 
His argument that the government's expectation that an increase in gas prices will spur investment and reduce imports are ill founded was supported by rural development minister Jairam Ramesh. Ramesh is understood to have said that while the government is offering incentive pricing, the prospects of gas were unverified. "The outgo is certain, the prospects are uncertain," Reddy is understood to have said. 
Power minister Jyotiraditya Scindiachipped in, saying a price hike will mean a rise in the cost of power; the outgo on power and fertilizer is billed at $6 billion (over Rs 36,000 crore).
A brief phone call from PM Manmohan Singh in October 2012 informed Reddy that his portfolio was being changed. This didn't come as a surprise: He was the latest of many who had experienced RIL's clout. 
Before him, during the UPA 1 tenure, Mani Shankar Aiyer also had a run in with RIL. Though there were more than one reason for his exit as oil minister, his spat with the leading business house did not help his case. 
Reddy accepted the portfolio change but it left him fuming and some seven months later he stubbornly and eloquently argued against hiking gas price to $8.4 a unit from $4.2. At the Cabinet meeting that lasted more than 100 minutes, Reddy argued there is no fi nancial or geological basis to the decision. 
His argument that the government's expectation that an increase in gas prices will spur investment and reduce imports are ill founded was supported by rural development minister Jairam Ramesh. Ramesh is understood to have said that while the government is offering incentive pricing, the prospects of gas were unverified. "The outgo is certain, the prospects are uncertain," Reddy is understood to have said. 
Power minister Jyotiraditya Scindiachipped in, saying a price hike will mean a rise in the cost of power; the outgo on power and fertilizer is billed at $6 billion (over Rs 36,000 crore).
Before him, during the UPA 1 tenure, Mani Shankar Aiyer also had a run in with RIL. Though there were more than one reason for his exit as oil minister, his spat with the leading business house did not help his case. 
Reddy accepted the portfolio change but it left him fuming and some seven months later he stubbornly and eloquently argued against hiking gas price to $8.4 a unit from $4.2. At the Cabinet meeting that lasted more than 100 minutes, Reddy argued there is no fi nancial or geological basis to the decision. 
His argument that the government's expectation that an increase in gas prices will spur investment and reduce imports are ill founded was supported by rural development minister Jairam Ramesh. Ramesh is understood to have said that while the government is offering incentive pricing, the prospects of gas were unverified. "The outgo is certain, the prospects are uncertain," Reddy is understood to have said. 
Power minister Jyotiraditya Scindiachipped in, saying a price hike will mean a rise in the cost of power; the outgo on power and fertilizer is billed at $6 billion (over Rs 36,000 crore).
Reddy accepted the portfolio change but it left him fuming and some seven months later he stubbornly and eloquently argued against hiking gas price to $8.4 a unit from $4.2. At the Cabinet meeting that lasted more than 100 minutes, Reddy argued there is no fi nancial or geological basis to the decision. 
His argument that the government's expectation that an increase in gas prices will spur investment and reduce imports are ill founded was supported by rural development minister Jairam Ramesh. Ramesh is understood to have said that while the government is offering incentive pricing, the prospects of gas were unverified. "The outgo is certain, the prospects are uncertain," Reddy is understood to have said. 
Power minister Jyotiraditya Scindiachipped in, saying a price hike will mean a rise in the cost of power; the outgo on power and fertilizer is billed at $6 billion (over Rs 36,000 crore).
His argument that the government's expectation that an increase in gas prices will spur investment and reduce imports are ill founded was supported by rural development minister Jairam Ramesh. Ramesh is understood to have said that while the government is offering incentive pricing, the prospects of gas were unverified. "The outgo is certain, the prospects are uncertain," Reddy is understood to have said. 
Power minister Jyotiraditya Scindiachipped in, saying a price hike will mean a rise in the cost of power; the outgo on power and fertilizer is billed at $6 billion (over Rs 36,000 crore).
Power minister Jyotiraditya Scindiachipped in, saying a price hike will mean a rise in the cost of power; the outgo on power and fertilizer is billed at $6 billion (over Rs 36,000 crore).


,TNN | Feb 12, 2014

NEW DELHI: While the media went into frenzy on Tuesday over Arvind Kejriwal's decision to file an FIR against Mukesh Ambani, Veerappa Moily and Murli Deora for alleged collusion in hiking gas prices, Gurudas Dasgupta sat in his Canning Lane house sipping black tea looking amused. 



Over the last two years, the United Progressive Alliance government has steadily lost credibility mainly because of the many cases of corruption that have been unearthed in recent months.
Yet another controversy has hit the national scene with a new report by the Comptroller and Auditor General indicting India's largest private sector company, Reliance Industries Ltd, for the violation of the terms of its contract in exploring gasfields in the Krishna-Godavari Basin.
If the allegations of irregularity, as indicated by the CAG, in the exploration in the KG Basin in Andhra Pradesh are true, then this could be a major factor contributing to price rise, as corruption in national assets like gas and petroleum puts inflationary pressure on the price of goods due to the high rate of fuel and transportation.

The CAG has asked the Union petroleum ministry to review the decision to allow Reliance Industries to retain the entire KG-D6 block.
Communist Party of India-Marxist Rajya Sabha member and trade union leader Tapan Sen has been fighting the alleged nexus between Reliance Industries and the UPA government for the last five years.
Away from the media glare, his -- and his party's -- battle for years was largely unknown, but the CAG report appears to have vindicated his stand.
Early in his career, Sen worked with the Steel Authority of India Limited. He has been a trade union activist since 1971 and eventually became general secretary of the CPI-M's Centre of Indian Trade Unions, CITU, a position he holds currently.

He is a member of Parliament's Standing Committee on Petroleum and Natural Gas. Sen has interacted with the Prime Minister's Office regularly on the alleged irregularities committed by Reliance Industries in gas exploration in the KG Basin.
In a tape-recorded interview to Rediff.com, Sen explains in detail what he believes are the irregularities committed by Reliance Industries and how the UPA government has allowed the petrochemicals giant to get away with it.

The interview was conducted after the draft CAG report was released, but before the final report was made public. Sen granted Sheela Bhatt the interview expressing apprehensions that it will not be published. "Nobody," he said, "wants to write on this huge scam which is bigger than the 2G scam."
How were you introduced to the irregularities in the petroleum and gas sector?
It was my duty to do the follow-up of the petroleum sector because my party had assigned me that duty by making me a member of the Standing Committee on Petroleum and Gas.
Besides, it is not just about my own political interest since the petroleum sector is a lifeline of the national economy in terms of fuel and energy security. So I had to take deep interest.
Through competitive bidding in the National Exploration Licensing Policy, the major part of the Krishna Godavari Basin had gone to Reliance Industries and its partner Niko Resources Ltd. They discovered gas in the KG Basin.
I was keeping a close watch on the time given to them, how the explorers were working, how gas was found and how the government would ensure that, finally, gas reaches consumers at an affordable price.
I kept a close watch on the whole chain of development. The entire scam of KG Basin came to light through a Parliament question first asked on December 12, 2006 by me and my colleague, the late Chittabrata Majumdar. It was a joint question.
We had got the information that in the KG Basin case, Reliance had placed a field development plan to produce 40 million standard cubic meters per day (MMSCMD) of gas. They placed the expenditure of $2.47 billion.
After some time they submitted a renewed field development plan claiming that now they will produce 80 MMSCMD at the expense of $8.84 billion. So production capacity doubled, but expenditure was inflated almost four times.
How did you come to know about it?
Nobody knew this till December 2006. It came out in Parliament in the reply of the petroleum minister. Any layman can tell you that, as per textbook economics, if your production is increasing, then your expenditure per unit must come down. But, here, production cost almost quadrupled.
Even if you take into account the uncertainties of the sector. . . even if you take into account the trial and error method of digging here and there, even if you take into account your wasted efforts of searching gas and exploring, and even if you take international standards for doubling production, your development cost cannot triple or quadruple.
Immediately I wrote to the (then) petroleum minister Murli Deora. He acknowledged my letter and gave a standard response that the matter is being looked into.
Within a few days Deora called me. He spoke to me on the issue. He told me to speak to the chief of the Directorate General of Hydrocarbons, V K Sibal -- who has now been charge-sheeted by the CBI for favouring the US firm.
In my meeting with him, he (Sibal) tried hard to justify the figure of expenses given by the Reliance. I told him, 'I have access to information on what's happening around in the world of gas exploration. If you take into account wasted efforts, even then Reliance can't charge the country like this. It's a clear case of gold-plating the cost.'
It would incur the government a big loss because only after recovering the cost of production would the government start getting a return on the national asset.
Gas is a national asset. Reliance is the contractor and definitely it is entitled to recover the cost.
But the inflated cost of Reliance has national ramifications. If the cost of gas exploration is too high, then it will affect the prices.
What must be the estimated cost to the exchequer?
It is not right to quantify the loss only on one account. The loss is on various accounts. Let me first tell you what happened at Sibal's level.
Deora asked Sibal to arrange for a conference with me. We wanted to examine the field development cost and wanted to know how it was approved.
The approval was given to Reliance in 33 days. I repeat, the renewed field development plan worth $8.84 billion was approved by the ministry in 33 days.
How can such a huge cost escalation be approved in 33 days only?
In the petroleum ministry, the conference took place. They could not reply to any of my questions. I told them, 'You have not presented to me your own estimate of cost of exploration. You have only presented before me the types of expenditures, cost of rigs, etc.'
I told the ministry's officers, 'you haven't quantified how you have arrived at the estimate of $2.47 billion for 40 MMSCMD to $8.84 billion for 80 MMSCMD. I understand 5 to 10 per cent of cost here or there, but it can't be more than that because it's an international business'.
The ministry should have allowed reasonable profit to Reliance, but before that they should have quantified it on their own. They could not convince me. I requested for an independent examination of it.
No doubt, accordingly the petroleum ministry appointed an impartial agency that included a Canadian expert also.
Then I got information that the Canadian company had a conflict of interest because they were earlier with Reliance. Again, the formation of the examining panel was changed.
I am not a spy. These people are very powerful and they have lots of money. Anyway, the DGH stood by its decision.
The independent agency also stood by DGH's decision. They never gave me that report. They communicated to me. . . orally.
What did you do next?
In 2007, I wrote to Prime Minister Manmohan Singh. I wrote that I am not satisfied with the petroleum ministry's presentation. I wrote four or five times to the PM. Again, I resumed my letter-writing when the petroleum ministry was deciding the pricing of KG Basin gas.
High cost of gas has a bearing on prices of goods, so again I started writing letters. The government appointed the Empowered Group of Ministers.
On the floor of Parliament, I questioned it because fixing of price of gas is a technical job and not a political job.
A bunch of ministers cannot be the custodian of all the knowledge under the sky. For fixing of pricing of gas and petroleum, you need cost accountants and industrial engineers. Here, the EGoM was doing it.
I proposed that they scrutinise the cost of production, get the price set that gives reasonable returns on cost of production. The government gives reasonable returns of 12 to 15 per cent on the cost to companies like ONGC.
I said, 'For Reliance you make it 25 to 30 per cent. I wanted the technical people to decide the price of gas explored by Reliance and then let political men decide if Reliance would deliver the fuel to the common man at that price or not.'
That was the political decision the government should have taken. After all, 30 per cent of power production in the country is run on gas.
What happened eventually?
Reliance, the company that had 'gold-plated' the expenditure of exploration, asked for a price of $4.3 per mmBtu. It was their discovery of price and they made out some formula for it, that I subsequently came to know.
And the EGOM had to work on it. They claimed that they got the bidding for it and they linked it to international price of crude oil.
Whatever India is producing under its own soil was linked it with the international price. I questioned the process of fixing of price.
I told the government, 'You must reply what is the basis of fixing the price of $4.3 per mmBtu by Reliance.'
Just to make a posture and fool the people, the government agreed to $4.2 mmBtu. A slight difference was made to say that they have not accepted what Reliance told them.
There was another impropriety done to the nation.
Reliance, that quoted $4.3 mmBtu to EGOM, quoted $2.34 mmBtu in the international competitive bidding of NTPC.
They would not have quoted $2.34 mmBtu without keeping a satisfying profit-margin.
The same Reliance is on record saying in the Supreme Court, where two brothers were fighting a legal case, on an affidavit, that their basic cost of exploring gas is much less than $2.00 mmBtu.
The EGOM had all these facts before them, but still in their wisdom they obliged Reliance and fixed the price at $4.2 mmBtu. I think the gold-plating done by Reliance in the capex had the bearings on that.
The country has to apply national security parameters and also the actual cost of exploration before fixing the price. What actually happened then?
Even before getting commercial production Reliance started getting its profit on the asset that belongs to the people of this country. . . they (Reliance) are just a contractor.
The manner in which they deceived the nation and the government and the way they fixed the price formula, they got a bonanza.
NTPC has written to the government that if it fixes the price as per Reliance's claims then government-owned company NTPC will lose Rs 24,000 crore (Rs 240 billion) in its two project in Kawas and Gandhar. It was given in writing to the EGoM.
What was the real game behind the scene?
Mukesh Ambani's RIL backed out of the NTPC agreement. Different games were played at different times. Initially, when both (Ambani) brothers were together RIL had quoted a certain price, but when they fell out, the equations changed.
Anil Ambani said he should be given gas at the price agreed with NTPC. So RIL backed out from NTPC, too. RIL didn't bother about NTPC which is generating power for the nation.
Now, a court case is going on between Reliance and NTPC.
How much is the actual loss to the government?
Whatever the money Reliance has to make, they have made.
The government should have quantified the loss to the exchequer. The government should have calculated when would Reliance recover its cost and when would the government start sharing profits.
Reliance hiked the price from $2.34 mmBtu to $4.2 mmBtu. So, fertilisers companies, power plants and common consumers are paying more to Reliance. This collective loss by the nation and to 1.2 billion people should be calculated.
The cost to the nation is just not quantifiable. It's unquantifiable.
You can quantify revenue generation, but not the real loss. It is due to the venture where the government and corporate played jointly.
The higher capex cost means it will take longer for the government to get net revenue from the project.
Reliance made the gain, and I don't know who else made the gain in the process. That's anybody's guess.
There is another angle to the issue. The same Reliance sold 30 per cent stake to British Petroleum for $7.2 billion. It was approved by the government.
This is a windfall for Reliance, but it is the loss to the people of India.
What was Prime Minister Manmohan Singh's response to you?
I wrote to him. He said, 'I have received your letters. I am having the matter looked into'. That's all. Nothing more. His stand is what stand the EGoM has taken.
The government has not come out till now to admit that something wrong has been done. Prime Minister Singh has said regarding the 2G scam that, 'We live in a world of uncertainty and whether it is the Comptroller and Auditor General, whether it is a parliamentary committee. . . they analyse post facto. They have a lot more facts which were not available to those who took the decision'.
But, in the KG Basin case much before the EGoM took the final view on pricing, we took pains to make the government aware of all the information. There is nothing post facto here. The prime minister can't have this excuse. Everything was in public domain.
I raised (the issue) in Parliament, facts were given to the EGoM headed by (Finance Minister) Pranab Mukherjee. A greater crime has been committed here.
On pricing, a committee of secretaries was appointed and they also said, 'Don't do this now. ' The Cabinet secretary and many others have directly or indirectly told the government not to fix a price of $4.2 mmBtu.
The EGoM had Ministers of Power Sushilkumar Shinde, Fertilisers Ram Vilas Paswan, and the petroleum minister. I have information that the decision was not unanimous to favour Reliance in the EGoM.
In their presentation to the EGoM, the power and fertilisers ministries gave their opinion against fixing the price asked by Reliance. You can get it through RTI (the Right to Information Act).
Where does the matter stand now?
The country stands looted and the country continues to be looted.
What was the role of DGH?
DGH Sibal should be punished. He was the regulator. I have demanded that he should be questioned. The approval of cost of exploration projects is given to him and he approves it.
To be fair to a risk-taker like Reliance, one has to say that you can't quantify risk. When somebody is taking such a huge risk on such a huge project they would like to earn . . .
That's a general statement. Yes, there are risks. This risk is not something that is immeasurable.
I said, 'Please go by international standards. In this world, it is not only Reliance that is drilling into the earth or sea and finding gas'. I told you I have taken into account the risk that is involved, and the failure also.
See, when Reliance filed its first field development plan they had surely taken into account the risk factor.
Why did Reliance do this?
They wanted to make more money.
Then why did they not think of it in the first field development plan?
Because they wanted to make more money. Making money doesn't have an end.
Fooling the people is a kind of addiction. Once, I can fool you for $10, next time I will fool you with a bigger margin of $30.
What do you think of the draft CAG report on the KG Basin contract?
The CAG has said that there is a loss to the government in the KG Basin deal. Reliance has inflated cost on different counts. Whatever I have said in my 2006 letter to the government has been thoroughly vindicated in the CAG's draft report.
I think DGH Sibal should be prosecuted. The production-sharing contract should be re-written and price level should be revised and the government should bring it down.
It will make electricity cheaper, fertilisers cheaper and industries would benefit.
Whom do you blame?
I don't blame Reliance.
If I get the opportunity to steal, am I going to leave it? It is the duty of the government to see that nobody takes people for a ride.
There can be some defaults or mistakes in deals. This is not such case.
All the facts were before the government . . . there were whistleblowers within the system, but the government turned a blind eye to them and took the decision to favour Reliance.

RIL violated contract with govt, said CAG


NEW DELHI: The federal auditor in 2011 accused RIL of violating the terms of contract for the KG-D6 block off the AP coast but did not talk about loss to exchequer or impact on gas price. 
The CAG report on a special audit of RIL books for 2006-2008, when most major equipment and services were contracted, let RIL off the hook on artificially jacking up the cost of bringing the field into production. 

The CAG report on a special audit of RIL books for 2006-2008, when most major equipment and services were contracted, let RIL off the hook on artificially jacking up the cost of bringing the field into production. 



The Times of India

Jaipal Reddy lost portfolio for questioning RIL's output claims?


Comments


Devidas (Bangalore):
“Reddy made the point that gas is sovereign property and RIL was only contracted to extract it and needed to realize it could not fi x prices as if it owned the resource”. A brief phone call from PM Manmohan Singh in October 2012 informed Reddy that his portfolio was being changed. This clearly went to show Manmohan Singh had acted in disregard of the directions of the Constitution in Art.60, 53(1) and especially Art.39 (b) and committed non-compoundable offences punishable under the IPC. ..


Delhi Lt Guv Jung previously worked with RIL? 

Posted by: Aswathy 
February 13, 2014

What connects Delhi lieutenant governor Najeeb Jung and Mukesh Ambani? When he was joint secretary (exploration) in the union ministry of petroleum and natural gas, Jung was part of the team that approved the privatisation of the Panna-Mukta oil fields, which were leased in February 1994 to a Reliance-led consortium. 

Apparently, Jung's previous association with RIL has miffed the chief minister Arvind Kejriwal, says a Hindustan Times report. http://www.hindustantimes.com/india-news/kejriwal-reliance-row-jung-s-past-stints-with-energy-giant-a-sore-point/article1-1183326.aspx

Kejriwal, on Tuesday, had declared a legal war against the RIL. He has ordered the state government's anti-corruption bureau to file FIRs against Reliance Industries and several union ministers for manipulating the price of natural gas from the Krishna-Godavari Basin. Reliance has rejected the allegations, which they described as 'shocking'. Jung was part of the government team which helped the oil fields privatisation   The Panna oil fields were originally discovered by ONGC. Jung was part of the government team which helped the privatisation process. 

Although, a CBI case had been registered to probe the privatisation of the oil fields, the probe was terminated abruptly as the case diaries of the investigating CBI officer, Y P Singh, had been "lost." After the privatisation issue snowballed into a controversy, Jung resigned from the IAS. After that he worked with Asian Development Bank and later, joined Reliance Global Management Services Ltd in London to look after its European operations. 

According to sources, between February 2005 and December 2006, Jung also served as "advisor to the chairman" of the Reliance-funded think tank Observer Research Foundation in an "honorary capacity", says the HT report. Interestingly, none of these information has been mentioned in his biography posted on the lieutenant governor's official website. Oneindia News

Read more at: http://news.oneindia.in/india/delhi-lt-guv-jung-previously-worked-with-ril-1394275.html
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