Millennium Post

Whose govt?

The serious national natural gas crisis triggered by the massive non-fulfillment of production targets at the Krishna Godavari-Dirubhai 6 (KG-D6) block by private sector operator Reliance Industries Ltd (RIL) and its Western partners — Great Britain’s BP Plc and Canada’s Niko Resources Ltd — is not an isolated problem specific to a particular Indian industry. Nor is the Union government’s total failure to discipline the delinquent companies an exceptional or special case.

Rather, the present sorry situation is yet another example of a particular type of 'helplessness' that has become the hallmark of the nine-year-old Union Government led by Manmohan Singh. This 'helplessness' is a complete inability to react and protect the Indian public interest whenever large corporate entities short-change the nation for private profit. Curiously, this 'helplessness' becomes even more glaring and appalling when companies belonging to the US-led Western establishment happen to be the players.

The Manmohan Singh government has so far gotten away with its non-reaction to the KG-D6 natural gas fiasco largely because the country's political class, policy fraternity, economists and media have either chosen to pretend that the problem does not exist or obliquely tried to subvert public opinion in favour of the errant corporates (RIL, BP, Niko) in the name of upholding the 'spirit of free enterprise'.

However, the actions and reactions that have occurred in the context of the KG-D6 gas production shortage cannot exactly be described as conforming to the spirit of a free enterprise economy'. Rather, they seem to be conforming more to the spirit of a free-for-all economy.

Distilled of all the techno-economic jargon that the policy fraternity, economists and media have deliberately employed in the current public discourse on the KG-D6 controversy to garble the central problems, the issue basically boils down to one of private corporations flouting their contractual commitments on production of natural resources (in this case natural gas) because such a strategy suits their fundamental motive of maximising profits. In the process, the issue of how much this hurts the national interest of the country whose natural wealth they have been entrusted with has been rendered absolutely irrelevant.

Reliance Industries Ltd which has a 60 per cent share of the KG-D6 block, BP (30 per cent share) and Niko (10 per cent) have been consistently supplying less than the committed quantum from the Dhirubhai 1 and 3 fields (D1& 3) from which gas production started in 2009. After taking output to a peak of 61 million standard cubic metres per day (mmscmd) in 2010-11, they cut it down to around 50 mmscmd in 2011-12 and 26 mmscmd in 2012-13 and are currently producing 9 mmscmd. And their contractual commitment was to produce 80 mmscmd, making the present shortfall an astronomical 90 per cent.

However, the question being dodged by the Indian policy pundits, corporate watchers, economists and media to good-humour the corporate interests is — Why has the RIL-BP-Niko combine been producing less than that their contract commitment? The answer is simple.

It is the classic Economics textbook case of the producer producing less and hoarding reserves just because the price does not suit him (or rather his motive of maximising profits.) KG-D6 operator Reliance Industries Ltd and its Western partners BP and Niko are producing 90 per cent less gas than they had promised to in their production sharing contract (PSC) because their motive is not the highest possible output but rather the highest possible margin per unit produced.

The trio’s strategy has simply been to hold back reserves and keep most production capacity idle as long as prices stay at the current level of $4.2 per unit. All this while they have been demanding a huge rise in the gas price, claiming that extraction operations are otherwise 'economically unviable'.
The Government, on its part, has partially succumbed to RIL-BP-Niko's demand for such a price hike. It set up a committee to study the matter under Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan. The panel has suggested doubling of natural gas prices from $4,2 to $8.4 per unit. But the Reliance Industries Ltd-BP-Niko combine's public posture in reaction to Rangarajan's anti-people proposal is that this is not enough. To continue production, they need the government's mandate to loot the nation even more.

Reacting to RIL-BP-Niko’s screaming deviation from their commitments made to the Indian State and the impunity with which they are harming the Indian economy, the Directorate General of Hydrocarbons (DGH), the country’s upstream petroleum and natural gas industry regulator, has called for a $1.786 billion penalty to be imposed on the delinquent companies.

The DGH also wants the Reliance Industries Ltd-BP-Niko combine to be forced to relinquish 6,601 sq km of their contract area (86 per cent of the total) in the KG-D6 block, which potentially holds gas reserves worth $4.83 billion, for delays in putting them to operation. The total contract area in the block is 7,645 sq km.

The DGH’s  recommendations — strongly backed by the Comptroller and Auditor General of India (CAG) which too has become a vanguard of the efforts to thwart the Manmohan Singh Government’s plethora of anti-Indian activities — were made in December 2012 and again in April this year and endorsed by the joint secretary (exploration) as well as the petroleum secretary.

However, true to the pro-West and anti-Indian policy culture that the Manmohan Singh Government has fine-tuned for itself over the last nine years, it seems in no hurry to allow the implementation of these measures to rein in the foreign economic plunderers — British multinational corporation BP and Canadian MNC Niko — and their Indian collaborator company Reliance Industries Ltd.
Worse, it is trying to cheat the Indian people by pretending to take ‘strong action’!

The Centre is reportedly finalising a plan to cap the prices that Reliance Industries-BP-Niko will receive for natural gas produced from the under-performing fields of the KG-D6 block till the trio clear their ‘past dues’. This would necessitate an amendment of the Union Cabinet’s earlier decision to double gas prices from all fields to $8.4 per unit from April 2014, as proposed by the Rangarajan Committee.

Thus, the only step the Government proposes to take against RIL-BP-Niko for their KG-D6 gas output 'mismanagement' is to disallow them from charging the $8.4 per unit rate for a certain amount of produce. The Centre does not seem to be in a mood to listen to the DGH's advice to impose a $1.786 billion penalty on the combine or force the errant companies to relinquish 6,601 sq km of the contract area in the KG-D6 block.

This under-reaction to the corporate loot of our country’s natural resources is yet another glaring instance of the Manmohan Singh government conniving with the Western establishment and its Indian ‘allies’ (in this case, Mukesh Ambani-led Reliance Industries Ltd) to help them continue and consolidate the economic drain of our resource-rich country that had been started by the British after Battle (or rather non-battle) of Plassey in 1757. Today, Dr Singh and his government seem to have gone on overdrive to facilitate our country’s economic loot by the West.

And, to add insult to the injury that they have caused to the Indian nation by their under-production of natural gas that is so vitally needed by our economy, RIL-BP-Niko have demanded that the Union Government allow the appointment of ‘independent’ foreign consultants to assess the reasons for their output drop at the KG-D6 block’s D1 and D3 fields.

And guess who gets to choose these ‘consultants’? Who else but Reliance Industries Ltd, BP Plc and Niko Resources Ltd. And guess which countries these alleged consultants will come from? Where else but the United States of America, Great Britain and Canada.

Incidentally, the ‘reservoir consultants’ proposed by RIL-BP-Niko are Gaffney, Cline & Associates of London (Great Britain) and Calgary (Canada), Ryder Scott of Calgary (Canada) and Houston (USA),  DeGolyer & MacNaughton of Dallas (USA), and Netherland, Sewell & Associates of Dallas (USA).

The coincidence is rather intriguing. Reliance Industries Ltd’s foreign partners in the KG-D6 venture happen to be from Great Britain (BP Plc) and Canada (Niko Resources). And the consultants suggested by RIL-BP-Niko too happen to be from those very same countries (Great Britain and Canada) and their senior ‘ally’ — the USA.

Are the names of DeGolyer and MacNaughton, Gaffney, Cline & Associates, Netherland, Sewell & Associates and Ryder Scott being suggested by their compatriot companies BP and Niko and their Indian business ‘partner’ Reliance Industries Ltd to make disinterested and objective technical assessments? Or are they being roped in to give conclusions that would suit the interests of these firms from their own countries — against the national interests of the host nation India?

The audacious ‘foreign consultants’ proposal has, however, been summarily rejected by the DGH-led Management Committee, the panel that oversees the KG-D6 block. But alas! According to latest reports, the Manmohan Singh Government is in the process of removing Directorate General of Hydrocarbons D-G R N Choubey himself from his post. One need not be a rocket scientist to fathom the reason.

Reacting to the string of dubious developments related to RIL-BP-Niko and their handling of the KG-D6 block gas reserves, Communist Party of India (CPI) MP Gurudas Dasgupta has alleged that it is Union Petroleum and Natural Gas Minister M Veerappa Moily who has ordered the removal of Choubey, a 1981 batch Indian Administrative Service (IAS) officer of the Tamil Nadu cadre , to favour Mukesh Ambani-led Reliance Industries Ltd. In a letter to Prime Minister Manmohan Singh, Dasgupta has dubbed the DGH’s removal part of a ‘sinister ploy’.

‘The present incumbent was appointed in June 2012 for a tenure of three years. The plan currently underway to transfer him prematurely is a sinister ploy by the petroleum minister, who is acting at the behest of RIL in the matter,’ said Dasgupta.

Choubey is paying the price for the independent views he has taken in matters related to the RIL block. He is being punished by the pro-West Manmohan Singh regime for daring to defend India’s natural resources from two Western plunderer firms and their Indian lackey company.

Referring to the DGH’s proposal to force the relinquishment by RIL-BP-Niko of eight KG- D6 block discoveries covering 6,601 sq km, Dasgupta opined that by stalling the relinquishment of an area with 1,150 billion cubic feet of gas, Moily is trying to provide windfall profits worth Rs 60,000 crore to Reliance Industries Ltd and its Western partners BP and Niko.

The battle lines have been drawn.

Who will now protect India’s  national wealth and economy from the Western establishment and their local corporate, political,  intellectual and media collaborators?
Next Story
Share it