KGD6: PM why does your heart beat for Reliance, not NTPC?

Series of letters to PM from CPI MP, questioning ‘undue benefit’ to Reliance, stonewalled

GN Bureau | November 2, 2012




That direct question to prime minister Manmohan Singh was one of the highlights of Arvind Kejriwal's press conference on Wednesday, October 31.

Kejriwal asked why the government was being so kind and considerate to Mukesh Ambani's Reliance Industries Limited (RIL) even as it was out to extract higher prices for natural gas from Krishna-Godavari D6 (KGD6) fields, in violation all contractual obligations.

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The prime minister had referred Reliance's appeal to hike the gas price from $4.2 per mmBTU (million metric British thermal unit) to $14.2 per mmBTU to the attorney general for his opinion after petroleum minister Jaipal Reddy rejected the request. According to Kejriwal, Reddy and the ministry had held that granting the increase would “result in Rs 43,000 crore of additional benefits to RIL” — and an equal burden on the government and the public.

Earlier, in 2006, when Reliance had reneged on a contractual agreement to provide NTPC gas at $2.4 per mmBTU, prime minister Singh did not find it necessary to intervene on behalf of NTPC, Kejriwal contended.

Stark and direct as Kejriwal’s question was, it is now clear that it was not the first time the prime minister was asked this question. He was asked this earlier, in fact on several occasions, and officially, by Tapan Sen, a Rajya Sabha member of CPI. And Sen repeatedly got the same response that Kejriwal has elicited from the prime minister: a stony silence.

In a string of letters dating back from October 10, 2011, right up to May 16 this year, Sen, member of the standing committee on petroleum and natural gas, has been asking the prime minister to intervene and ensure that Reliance got no more favours from the government at the expense of the public, or public sector enterprise NTPC (National Thermal Power Corporation).

In a letter dated March 31, 2012, Sen said: "....(The) PMO's reported advice for seeking government legal opinion on midterm price correction is in sharp contrast to its unsympathetic and ‘touch me not’ attitude to government-owned enterprises. It was not felt prudent by the government either to seek Law Ministry opinion or to give legal support to the cause of NTPC, a maharatna PSU, when RIL went back on its offer to supply natural gas at $2.34 per unit for 17 years.

“NTPC is still fighting the case in High Court on its own. (A) level-playing field warrants that if RIL feels aggrieved on the present gas price, it should seek legal redressal on its own; it is not for the government to explore possibility to bail out RIL or BP."

Sen does not stop there. He drives the knife deeper by contrasting the PMO's stand in the matter of another natural resource, coal, when PSU Coal India Limited was ordered to enter into stiff fuel supply contracts with private power companies: "This discriminatory approach becomes more glaring when the PMO directs Maharatna PSU Coal India to sign Fuel Supply Agreements for 20 years with guaranteed delivery of 80% contracted quantity  of coal while remaining conspicuously unreactive on the ‘mysterious drop in KGD6 gas production’.”

Earlier this year, in a letter to Singh on January 16, Sen reminded the prime minister that natural gas production at KGD6 “has come down from 45 to 38 mmscmd”, though the RIL was committed to produce 70 mmscmd under the contract. Specifying that this caused “direct loss to the country’s energy economy of around Rs 15,000 crore”, he wrote: “It is expected from the contractor...to scale down production of gas from KGD6 for achieving a premature price-rise from the government as a pressure-building tactic. But it is also expected that the government would appropriately respond to such coercive tactics...”

Prime minister Manmohan Singh, though, has done nothing more than acknowledge Sen’s letters, or to inform him that his letters have been forwarded to the ministry concerned.

Four of Sen’s letters are attached below

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