Who would cancel all those contracts of natural resources to India incs and MNCs, Mr Kejriwal?
Who would cancel all those contracts of natural resources to India incs and MNCs, Mr Kejriwal?Whatever may be the growth rate or fiscal deficit, the growth rate of corporate India is amazing!As the political power lies within right there.
Indian Holocaust My Father`s Life and Time, Chapter: Nine Hundred nineteen
Palash Biswas
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Who would cancel all those contracts of natural resources to India incs and MNCs, Mr Kejriwal?
"The time has come for the people of this country to reclaim their resources. This kind of crony capitalism cannot be allowed in this country. It has eaten into the country's resources like a Frankenstein monster." Kejriwal said. We do agree with you Mr. Kejriwal. Then just tell us, what is the way out? The constitution and Parliamnetary system made standstill, masses have no information rather they are misinformed.Production system destroyed and the class of producers is subjected to genocide without any resistance. What do we gain from the exposure of known truth unless we consolidate rock solid unity of Indian people divided in caste, religion, ethnicities, languages, regions, fighting against one another and allowing the continuity of corrupt corporate governance. Elections would not change the situation as the alternative most possible is equally corrupt and governed by corporate India and MNCs.Just see, Arvind Kejriwal today came under attack from both the BJP and the Congress with the Opposition party charging his NGO with having dubious foreign funding while the ruling party dubbed the activist and his team as "frontmen" of anti-Congress forces.
"Mukesh Ambani is running the country it seems... Jaipal Reddy was removed as he refused to hike the charges being levied by Reliance Industries to supply gas to NTPC," Kejriwal said at a press conference.
Kejriwal accused Reliance Industries chief Mukesh Ambani of influencing Congress party's decisions.
The activist played out what he claimed were portions of tapes of lobbyist Niira Radia's conversations. The conversation makes it clear that Ambani had powerful influence over the Congress and the BJP, he claimed. "In the Nira Radia tapes, Ranjan Bhattacharya (former prime minister A B Vajpayee's son-in-law) is heard telling Niira that Mukesh Ambani told him 'Congress to ab apni dukaan hai."
"BJP signed a sweet deal with RIL in 2000. Congress faithfully implemented it."
A press release from IAC alleged Prime Minister Manmohan Singh had succumbed before corporate interests. "The PM was very sympathetic to RIL. PM requested Ministry of Petroleum to seek AG's opinion on whether gas prices could be increased midway as demanded by Reliance. It is strange why did the PM not show similar concern when NTPC was forced to accept higher gas price from RIL? Why is the PM not pulling up Reliance for not producing 80 mmscmd gas as per their commitment? Why did the PM not seek legal opinion when country¡¦s interests were at stake? Why is PM showing so much interest when RIL interests are at stake?"
It also says: "This episode explains the real reasons for price rise in the country. The government seems to be succumbing to illegitimate demands of some powerful corporates in the country (like RIL in this case). Benefits provided to RIL in this case contributed to price rise in power and fertilizer sectors. Similarly, on one hand, government says that they do not have Rs. 35,000 crores to provide LPG subsidy to the people, on the other hand, the government bends backwards to provide benefits to these corporate."
Kejriwal demands the cancellation of all the contracts on natural resources to Reliance.India Against Corruption on Wednesday brought Reliance Industries chairman Mukesh Ambani in its line of fire alleging that the UPA and the previous NDA governments had favoured his company by giving contract on gas exploration in KG Basin and concessions at a huge cost to the exchequer. The nexus between politicians and industrialists was the main reason behind rising prices in India, India Against Corruption activist Arivind Kejriwal said on Wednesday.What is new in an exposure so hyped? It is the ultimate truth of Indian Economy and Polity based on exclusion and excommunication. So what if in their latest exposé, Arvind Kejriwal and Prashant Bhushan of IAC targetted both BJP's Atal Behari Vajpayee-led NDA as well as the Congress-led UPA for 'selling out the interests of the common man to corporates'. ONGC is a public sector company which explored oilfields in India with its resources and manpower. In return the government of India gifted away those oil blocks to private companies and trying hard to sell out ONGC. Indian media , civil society and media overlooked these developments right from the beginning. The magical rise of India incorporation is not a latest phenomenon at all. Neither it just happened after neoliberal turnaround. It is a continuous phenomenon since transfer of power.Neoliberal policies rather helped other minor parties to gain and shape up the India Incs to hijack governance, policy making and legislation to multiply the profit and expansion thousand times at the cost of Indian people and Indian nation.Open market economy set the ground of monopolistic aggression against Indian People just to plunder natural resources abundant.
The oil ministry postponed Wednesday's scheduled meeting for India's official auditor to begin audit of Reliance Industries' (RIL) KG-D6 oil and gas producing block.
The Comptroller and Auditor General (CAG) had called an Entry Conference for Wednesday with RIL and the oil ministry to begin its second round of audit that is to cover RIL's spending on KG-D6 gas fields during 2008-09 to 2011-12.
Official sources told IANS that the meeting was called off by the ministry earlier this week.
The IAC played out an audio tape purportedly of talks between lobbyist Niira Radia and former PM A B Vajpayee's foster son-in-law Ranjan Bhattacharya.
In the tapes, Radia and Bhattacharya were heard talking about the composition of the Union ministry.
Kejriawal said that both Congress and BJP were helpless against Reliance Industries chairman Mukesh Ambani. In 2000, the NDA had favoured Mukesh Ambani's Reliance in gas pricing, Kejriwal said.
Calling it a "classic case of crony capitalism", activists Arvind Kejriwal and Prashant Bhushan alleged that Reliance was "blackmailing" the government to increase the price of gas by "almost stopping" the production and indulging in "hoarding like petty traders".
Attacking the decision to shift S Jaipal Reddy from petroleum ministry, they alleged it was now "absolutely crystal clear" that he was eased out of the crucial ministry only on account of "pressure" from Reliance Industries.They said Reddy was "honest" and his "ouster" was only because he "actively resisted" Reliance' demand for an increase in the price of gas and wanted to penalise the company for "wilful reduction" of production of gas.
He asked why did Prime Minister Manmohan Singh not seek the opinion of the Attorney General when the then petroleum minister Manishankar Aiyar "refused to give in" to Reliance' demand for increasing the price of gas from $2.34 per unit to $4.2 per unit in 2006.
"In 2006, Aiyar was removed and Murli Deora was brought in and he cleared the files within one and half months. Why does he seek the opinion of Attorney General now? Why does his heart beats only for Reliance?" Kejriwal said.
New petroleum minister M Veerappa Moily refused to react to the allegations.
Kejriwal said it is always said that the Prime Minister is not involved in corruption but he comes under the purview of Prevention of Corruption Act for certain decisions taken by his government in various matters like 2G and coal block allocations.
After "exposing" Congress chief Sonia Gandhi's son-in-law Robert Vadra and BJP president Nitin Gadkari, speculation was rife throughout the day on Wednesday over the anti-graft body's next target.
Kejriwal and Bhushan had hit a high with their attack on the Haryana government for allegedly winking at DLF offering sweetheart deals to Vadra.
Reliance industries on Wednesday hit back at India Against Corruption Activist Arvind Kejriwal for his claims that Mukesh Ambani was controlling the government,. In its statement issued, Reliance said that statements made by IAC were devoid of any truth.
Reliance said that the KG D6 basin has best technology and that the project has added great economic value to the country.
"Allegations made by IAC are at the behest of vested interests," it said.
Indian finance minister and the corporate set of policy makers seem to be too stressed to enhance the growth rate and RBI is under tremendous pressure to formulate monetary policies to boost market. Whatever may be the growth rate or fiscal deficit, the growth rate of corporate Indian is amazing!As the poiltical powerlies within right there.It is quite an unfamiliar development that the Reserve Bank of India left interest rates on hold on Tuesday but cut the cash reserve ratio for banks, defying pressure from the government to lower rates for the first time since April but also indicating it may soon ease policy further. While the decision to leave the policy repo rate unchanged at 8.00 percent was in line with forecasts, expectations for a rate cut had grown after India's finance minister on Monday outlined a plan to trim the country's hefty fiscal deficit. RBI stood by its tough anti-inflation rhetoric by opting not to lower the key policy rate though preferred to trim the CRR as a step to lower funding costs and possible compromise. A rate cut in the face of jump in September WPI, sharp upward revision to historical numbers and recent rebound in the proxy core inflation measure, might have put the bank's inflation-fighting credibility at risk. Apparently not enthused by the RBI's cautious stance, Finance Minister P Chidambaram today said that growth is as much a challenge as containing inflation and government would "walk alone" to face the challenge if it comes to that.
Reliance Industries, the country’s largest listed company, and its chairman Mukesh Ambani came under the attack of India Against Corruption (IAC) activists Arvind Kejriwal and Prashant Bhushan today for allegedly “threatening the democratic structure of the country” by influencing appointment of ministers at will. Even the prime minister is powerless in front of the explorer’s might, the activists said in a crowded press conference at the Constitution Club here.Kejriwal, who started the proceedings in Hindi, alleged that Jaipal Reddy, who was the Union minister for Petroleum and Natural Gas till last week, was removed because he opposed a Reliance proposal to rise the price of the gas by over three times to $14.2 per mmBTU (million metric British thermal unit).
People should prevent this Government from granting a $14.25 per unit price to RIL by sending RTI applications to the new Petroleium Minister Veerappa Moily, the activist said.
“RIL has the contract to extract oil from KG (Krishna-Godavari) basin. Under an agreement of 2009 with the government, they are supposed to sell gas at $4.2 per mmBTU up to 31st March 2014. Midway now, RIL is demanding that the price be increased to $14.2 per mmBTU. Jaipal Reddy resisted that and he was thrown out,” Kejriwal said.
They added that Reddy was not the first to lose his job for taking on Reliance citing the instance of Murli Deora replacing Mani Shankar Aiyer in 2006. Aiyer, according to them, had resisted a RIL move to increase capital expenditure in the basin, which the activists said, reduced the government’s profits and enriched Reliance’s coffers.
Bhushan called for cancellation of all contracts awarded to Reliance be cancelled. “Consequences otherwise are horrendous. These crony capitalists are threat to our democracy itself,” he said.
According to IAC, if the hike in gas prices was allowed, it would result in a substantial increase in the cost of power for end consumers. “Today, power from gas based power plant costs around Rs 3 per KWH (kilowatt hour). If gas price is increased as demanded by Reliance power prices would go up to Rs 7 per KWH,” the activists said in a statement. Such escalation in prices could make most of these gas based plant unviable and would have to be shut down, the statement added.
Another key allegation was “goldplating” of capital expenditure of which the comptroller and auditor general said that there is strong evidence. The Initial Development Plan submitted by RIL in 2004 said it would produce 40 mmscmd for an investment of $ 2.39 billion. In two years RIL submitted another plan saying it would produce double gas for an investment of $ 8.8 billion. “Doesn’t that sound strange? To double production, you increase your investment by four times? Having put the initial infrastructure in place, it should have cost lesser to create additional production capacity.’’ Kejriwal asked.
In response, Reliance Industries said, “The statements made by IAC in the press conference today are devoid of any truth or substance whatsoever and are denied.”
The statement added that the deep water exploration project in the KG-D6 basin “has deployed the best technical resources and has been recognized by the oil and gas industry as one of the very best in its class. This project has added great economic value to the country and by all accounts is a project of which India can be justly proud.”
The apple of Ratan Tata's eyes, Tata Motors may be struggling under extreme competition from the likes of Anand Mahindra-led Mahindra & Mahindra, but today its he (probably), along with shareholders were pleasantly surprised by some good news from a global investment banking and securities firm.
* Goldman Sachs says the auto maker's market capitalisation has potential to reach $30 billion by fiscal 2017, from current value of $13.8 billion, and to nearly double its cash flow during these four years.
* To get there, Goldman says Tata's Jaguar Land Rover unit would need to move to a new platform for its existing models such as Range Rover and Discovery with a light weight aluminium architecture, thus improving key factors such as fuel efficiency or pricing.
* JLR would also need to make inroads into smaller engine and lower priced vehicles, as well as enter more premium segments, Goldman argues.
* However, challenges include getting consumers to buy into the brand, tightening regulations in key markets such as Europe, and overcoming macro economic uncertainties such as FX volatility.
* Goldman Sachs maintains Tata Motors at 'buy', with a target price at 334 rupees.
Tata Motors shares gain 1.4 percent after this news hit the markets.
"Growth is as much a challenge as inflation. If government has to walk alone to face the challenge of growth, then we will walk alone," the finance minister of India, P Chidambaram said in his reaction to the RBI's second quarter policy review.
Mind you,Arvind Kejriwal’s press conference today, in which he targeted Mukesh Ambani of Reliance Industries, is one more signal that politics and business cannot continue on the old assumptions: that it is something that should be done behind closed doors. Or that the public need no concern itself with these details.First post reports.
Thanks to a procession of scams – from 2G to CWG to Coalgate, Vadragate and Nitin Gadkari’s Purti capers – the credibility of politicians has never been lower. What Kejriwal did today was to link politicians to businessmen – you cannot have political corruption without a corporate side to it. And who better to tell this story with than India’s biggest businessman – Mukesh Ambani.
The businessman-politician linkage has been the elephant in the bedroom, and Kejriwal brought this out clearly, even though it is difficult to prove the nexus except through circumstantial evidence.
While it served Kejriwal’s purpose to paint both the Congress and the BJP with the same brush – which creates the space for his own political ambitions – the critical point is this: business cannot henceforth be done non-transparently.
Arvind Kejriwal’s press conference today saw him target Mukesh Ambani of Reliance Industries. Naresh Sharma/Firstpost
However, Kejriwal pushed the envelope too far when he tried to link broader ideological and macroeconomic issues with corruption and profiteering. He also took a giant leap from Reliance’s gas pricing lobbying to increases in power tariffs – another battle he is waging in Delhi.
Some of the ideological positions he staked out are also problematic. For example he and Prashant Bhushan are on record to say that natural resources should be auctioned. This was the entire basis for calling Coalgate a scam – even though favourtism to some of those allocated coal blocks for free is another angle that could be truly scandalous.
But the purpose of giving blocks for free was to keep power tariffs low. If coal blocks are given at market prices, power prices would rise. This does square with Kejriwal’s argument that power prices should be cut when coal blocks should be given out at market prices to mine developers.
He also missed out on economic points. It makes no sense to import gas at $14 and then deny the same price to domestic producers. This is exactly what is happening with ONGC. We import at $110, and give ONGC less than half that price. The net result is ONGC does not have enough resources to take up exploration and bring down our import dependence.
Kejriwal deserves kudos for bringing out the issue of a cosy relationship between politicians and businessmen, but the need is for transparency on government and corporate processes. The economics of selling coal or gas at less than market prices has its own costs.
http://www.firstpost.com/politics/kejriwal-breaks-the-silence-on-business-politics-links-510031.html
"Who is being exposed today is the question that IAC has been asked repeatedly since morning," said Prashant Bhushan.
Bhushan said no one individual but the 'entire rotten system' would be exposed by India Against Corruption (IAC).
"The working of the Indian political and business system has been entirely subverted and corrupted. The tentacles of this crony capitalist system has entered every facet of Indian society at the top of which Reliance is the leading representative," Bhushan said.
Loot from such corruption has given corporates like these overarching power over the Indian government, he said.
Kejriwal went on to add that the target of today's press meet was Mukesh Ambani's Reliance Industries.
Hurt by Kejriwal's allegations against party chief Nitin Gadkari, the BJP said they were at the behest of those who are funding him from abroad, a charge rejected by the social activist.
The editorial of the latest edition of Congress mouthpiece Congress Sandesh, as also BJP journal Kamal Sandesh, projected Kejriwal in poor light.
Kamal Sandesh said he has taken a "supari (contract)" from foreign sources and demanded that the Manmohan Singh government investigate the matter.
"After ruining the Anna Andolan and in pursuit of its naked ambition, Team Kejriwal is involved in a conspiracy to create suspicion about 'democracy' and by doing so it is definitely playing into the hands of those who have no attachment either to India or Bharat Mata," the article said.
Kejriwal had recently alleged that Gadkari's Purti Group has bought farmers' land at cheap rates from the government and also got irrigation water from the dam in Gosikhurd area of Vidarbha diverted to his sugar factory.
"The main game of Kejriwal may be related to funding. The thing to be known is whether the funds belong to India or to the forces which want to weaken the country," the publication said.
"One who could not remain loyal to Anna, how can he be loyal to the nation? He is engaged in digging holes in democracy with the help of foreign funds," it said.
Kejriwal has refuted these allegations and asked the BJP to come clean on its funding in the last ten years.
Arvind Kejriwal's press conference on Wednesday saw a minor interruption when a man from the audience alleged that the anti-corruption activist and his India Against Corruption group were "fooling the country".
As Kejriwal was addressing the media, alleging a nexus between politicians and industrialists, a man from the audience got up and loudly demanded to know why Kejriwal and his wife, an Indian Revenue Service (IRS) officer, never got transferred for 30 years. Kejriwal is a former IRS officer.
"I want to ask why you and your wife were never transferred out of Delhi," he asked.
The man, who did not identify himself but kept insisting that he was "alone" and not backed by anyone, was immediately surrounded by Kejriwal's supporters.
The man then shouted out loudly that "Kejriwal and company are fooling the country".
Some of his supporters started shouting anti-Kejriwal slogans. They were promptly evicted by IAC supporters.
Kejriwal, resuming his speech, said the interruption was "deliberate and planned".
Here are the highlights/quotes of the meet, including the scuffle:
* IAC targets 'scam' behind price hike: Kejriwal says, "Industrialist-politician nexus behind inflation, which has impoverished India."
* On tapes: AB Vajpayee kin Ranjan Bhattacharaya talks to Niira Radia on DMK-Bhattacharya asks Radia whom in DMK does she want in Cabinet.
* Vajpayee gave KG Basin contract to Mukesh Ambani
* Reliance got 45,000cr windfall gains
*Present government not being run by Manmohan Singh but by Mukesh Ambani
* Reliance held govt to ransom demanding higher gas price and when Jaipal Reddy demurred he was unceremoniously removed from ministership.
* Reliance started hoarding gas like 'Tuchcha dalals' creating artificial scarcity in India.
* Reliance wanted to set the price of gas and not govt - UPA fell in line.
* Mulri Deora favoured Reliance too
* Pranab Mukherjee gave Rs 10,000 cr windfall gains to Reliance
* Why did government favour Reliance?
* Reliance 'dadagiri' hit gas production in India.
* Mani Shanker Iyer was removed to serve the vested interests of the politicians.
*Chaos at Kejriwal presser as IAC men rough-up bystander for asking anti-Arvind question.
* Why transfer of Kejriwal and wife did not happen for 20 years asks bystander.
Kejriwal restores orders says, will answer that question but digresses.
*Man thrown out for asking Kejriwal personal question.
* Bhushan says people of the country must reclaim their rights and ensure that their interests are not subverted.
Arvind Kejriwal says, he does not expect govt to do any thing about IAC exposé.
The people of India must ensure they throw out both Congress BJP from power and reclaim their Constitutional rights.
Read full IAC report:
Kya Congress Mukesh Ambani ki dukaan hai?
* In 2006, Mani Shankar Iyer was removed and Murli Deora brought in to increase RIL capex from $ 2.39 billion to $ 8.8 billion and to increase gas price from $2.34 per mmBTU to $ 4.2 per mmBTU.
*In 2012, Jaipal Reddy has been removed and Moily brought in to increase gas prices from $ 4.2 per mmBTU to $ 14.2 mmBTU and to condone RIL’s blackmailing of reducing gas production.
* Huge benefits given to RIL in last one decade despite flagrant violations of various agreements by RIL. Benefits to RIL causing serious price rise in the country.
* Both BJP and Congress involved. BJP signed a sweet deal with RIL in 2000. Congress faithfully implemented it.
* If RIL demand of increasing the gas price to $ 14.2 is accepted, it would lead to shut down of several gas based power plants and increase in power and fertilizer prices. It would result in Rs 43,000 crores of additional benefits to RIL.
In the Nira Radia tapes, Ranjan Bhattacharya (Vajpayee’s son in law) is heard telling Nira that Mukesh Ambani told him –“Congress to ab apni dukaan hai.” Facts below show that both Congress and BJP are in his pocket.
Reliance Industries Ltd (RIL) has the contract to extract oil from KG Basin. Under an agreement of 2009 with the government, they are supposed to sell gas at $ 4.2 per mmBTU upto 31st March 2014. Midway now, RIL is demanding that the price be increased to $ 14.2 per mmBTU. Jaipal Reddy resisted that and he was thrown out.
Jaipal Reddy had prepared a note for EGOM, in which he mentioned that acceptance of RIL’s demand would mean an additional profit of Rs43,000 crores ($8.5 billion) to RIL(in 2 years) at current levels of low production. Most of this gas is used in fertilizer and power production. Increasing gas price would mean an additional financial burden of Rs 53,000Crores ($ 10.5 billion) on central and state government (copy of relevant page of EGOM note is attached as annexure 1). This would in turn mean higher electricity and fertilizer prices in the country or a higher subsidy burden.
In order to pressurize the government, RIL substantially reduced its production of natural gas. Total consumption of natural gas in the country is 156 mmscmd. According to agreement, RIL was supposed to produce 80mmscmd (more than 50% of the total demand) from 2009. However, they are producing just 27 mmscmd, almost a third of their commitment. Production has been artificially kept low to blackmail the government. They are not just hoarding the gas, but also forcing various consumers to buy gas from abroad. Gas from abroad costs around $ 13 per mmBTU.
RIL’s stand is simple – “hum to gas $14.2 par hi denge, lena hai to lo, nahin to jao.” Who does this gas belong to? According to Supreme Court of India and the Indian Constitution, this gas belongs to thepeople of India. Complete surrender of UPA before RIL indicates UPA’s inability to run governance in accordance with the Constitution.
Drastic reduction in production has forced many gas based power plants in the country to shut down or run at much lower capacity. According to media reports, almost 9000 MW of gas based power plants are lying idle
. Today, power from gas based power plant costs around Rs 3 per KWH. If gas price is increased from $ 4.2 to $ 14.2 as demanded by Reliance, power rates would go upto Rs 7 per KWH. That’s too expensive. At that cost, most of these plants would have to permanently shut down.
This is not the first time that a union minister has been eased out at Mukesh Ambani’s insistence. In 2006, when RIL had to get its capex increased from $ 2.39 billion dollars to $ 8.8 billion dollars, Mani Shankar Iyer was removed and a more Reliance friendly MurliDeora was brought in.
Brief history:
RIL got this contract during NDA regime in the year 2000. The contract was meant to favor RIL right from the beginning. In any business, increase in costs means decrease in profits. However, the NDA government , signed a contract dictated by RIL wherein an increase in cost by one rupee meant additional profits of RIL by almost Rs 2.2. Isn’t it strange? A parameter called Investment Multiple has been defined in the contract as under:
Investment Multiple (IM) = Total Revenue / Total Investment
According to the contract, till IM is below 1.5, RIL takes away more than 80% of profits and government gets less than 20% of profits. It is only when IM becomes more than 2.5 that government gets 85%. This means, RIL has a huge incentive to keep IM below 1.5 by increasing the expenditure artificially. Thus if Reliance were to increase expenditure from 1 Billion to 2 Billion on a revenue of 5 billion, their own net income would go up from 1.6 Billion to 3.5 Billion. This is what the CAG has stated in para 8.1 of its performance Audit of Hydrocarbon PSCs. (extract from executive summary of CAG as annexure 2)
In 2004, RIL submitted an Initial Development Plan (IDP) saying they would produce 40 mmscmd for an investment of $ 2.39 billion. All this happened when Ram Naik was the petroleum minister in Vajpayee regime.
Within 2 years, RIL submitted another plan saying they would produce 80 mmscmd for an increased investment of $ 8.8 billion. Doesn’t that sound strange? To double production, you increase your investment by four times? Having put the initial infrastructure in place, it should have cost lesser to create additional production capacity.
Mani Shankar Iyer, who was the then Petroleum minister, would not have allowed this. So, Mani was shunted out of petroleum ministry and Murli Deora, famous to be Reliance man, was brought in January 2006. Despite strong protests by some MPs like Tapan Sen, Deora approved $ 8.8 billion expenditure. By allowing $ 8.8 billion expenditure, in effect, Deora allowed a future revenue of over Rs 1 lakh crores ($ 20 billion dollars) for RIL.
CAG has remarked that there is strong evidence that RIL is gold plating its capital expenditure. Expenditure has been artificially increased (for reasons mentioned above). For instance, RIL is required to place orders for its plant, machinery and other requirements through international competitive bids. CAG alleges that bids were arbitrarily rejected to favor some parties. Just one company namely Aker group got many contracts (see annexure 3, which is an extract from CAG report). Is this group related to RIL? Is RIL siphoning off money through this method?
RIL’s pressure tactics:
RIL signed a contract with NTPC in 2004 to supply gas for its power plants at $ 2.34 per mmBTU for 17 years. It signed a similar contract with RNRL to supply gas at $ 2.34 per mmBTU. However, RIL went back on its word. Under RIL’s pressure, EGOM headed by Sh Pranab Mukherjee, revised gas price in September 2007 to $ 4.2 per mmBTU. NTPC and RNRL were forced to accept gas from RIL at revised price. By doing this, Pranab Mukherjee headed EGOM gave an undue benefit of Rs8000 crores to RIL.
What is RIL’s actual cost of production?
Cost of production is much less than $ 2.34 per mmBTU. (Copy of extracts from an SC order Annexure 4).RIL had actually signed long term agreements with NTPC and RNRL for supplying gas at that rate for 17 years. This means that at $2.34 per mmBTU also, RIL was making adequate profits. India is getting gas at $ 0.9 per mmBTU from Oman. Gas rates in Canada are at $ 1.74 per mmBTU. This means that at $ 2.34 per mmBTU also, RIL was making huge profits.
RIL sold out nation’s resources:
Ownership rights of this gas belong to the people of India. RIL is just a contractor hired by GOI to extract gas. Strangely, RIL sold 30% stake in 21 of 29 oil blocks to British Petroleum in July 2011 at $ 7.2 billion. Government gave approval to RIL to do that. How can they do that? It is almost like – I hire a driver to drive my car and that driver sells off my car after a few days.
Performance of RIL so far has been much worse than perhaps the worst performing government department.
1. 4 times cost escalation within 2 years from $ 2.39 billion in 2004 to $ 8.8 billion in 2006.
2. Increase in gas price from $ 2.34 per mmBTU in 2004 to $ 4.2 per mmBTU in 2007 to the present demand of $ 14.2 per mmBTU.
3. Capacity created for producing 80 mmscmd after incurring such a huge cost ends up producing just 27 mmscmd after 12 years.
4. 31 oil wells should have been in production till now. Out of them, just 13 are functional.
Has any government department fared as badly? If this had happened in any government department, it would have been ripped apart by all government agencies and media.
RIL scam akin to coal scam:
This scam is on similar lines as Coal block allocation scam. Coal blocks were given away saying that coal production was less in the country and private sector participation would increase coal production. Rather than produce coal, the private parties hoarded coal blocks to sell them at appropriate time in future.
Indian Holocaust My Father`s Life and Time, Chapter: Nine Hundred nineteen
Palash Biswas
Mobile: 919903717833
Skype ID: palash.biswas44
Email: palashbiswaskl@gmail.com
Who would cancel all those contracts of natural resources to India incs and MNCs, Mr Kejriwal?
"The time has come for the people of this country to reclaim their resources. This kind of crony capitalism cannot be allowed in this country. It has eaten into the country's resources like a Frankenstein monster." Kejriwal said. We do agree with you Mr. Kejriwal. Then just tell us, what is the way out? The constitution and Parliamnetary system made standstill, masses have no information rather they are misinformed.Production system destroyed and the class of producers is subjected to genocide without any resistance. What do we gain from the exposure of known truth unless we consolidate rock solid unity of Indian people divided in caste, religion, ethnicities, languages, regions, fighting against one another and allowing the continuity of corrupt corporate governance. Elections would not change the situation as the alternative most possible is equally corrupt and governed by corporate India and MNCs.Just see, Arvind Kejriwal today came under attack from both the BJP and the Congress with the Opposition party charging his NGO with having dubious foreign funding while the ruling party dubbed the activist and his team as "frontmen" of anti-Congress forces.
"Mukesh Ambani is running the country it seems... Jaipal Reddy was removed as he refused to hike the charges being levied by Reliance Industries to supply gas to NTPC," Kejriwal said at a press conference.
Kejriwal accused Reliance Industries chief Mukesh Ambani of influencing Congress party's decisions.
The activist played out what he claimed were portions of tapes of lobbyist Niira Radia's conversations. The conversation makes it clear that Ambani had powerful influence over the Congress and the BJP, he claimed. "In the Nira Radia tapes, Ranjan Bhattacharya (former prime minister A B Vajpayee's son-in-law) is heard telling Niira that Mukesh Ambani told him 'Congress to ab apni dukaan hai."
"BJP signed a sweet deal with RIL in 2000. Congress faithfully implemented it."
A press release from IAC alleged Prime Minister Manmohan Singh had succumbed before corporate interests. "The PM was very sympathetic to RIL. PM requested Ministry of Petroleum to seek AG's opinion on whether gas prices could be increased midway as demanded by Reliance. It is strange why did the PM not show similar concern when NTPC was forced to accept higher gas price from RIL? Why is the PM not pulling up Reliance for not producing 80 mmscmd gas as per their commitment? Why did the PM not seek legal opinion when country¡¦s interests were at stake? Why is PM showing so much interest when RIL interests are at stake?"
It also says: "This episode explains the real reasons for price rise in the country. The government seems to be succumbing to illegitimate demands of some powerful corporates in the country (like RIL in this case). Benefits provided to RIL in this case contributed to price rise in power and fertilizer sectors. Similarly, on one hand, government says that they do not have Rs. 35,000 crores to provide LPG subsidy to the people, on the other hand, the government bends backwards to provide benefits to these corporate."
Kejriwal demands the cancellation of all the contracts on natural resources to Reliance.India Against Corruption on Wednesday brought Reliance Industries chairman Mukesh Ambani in its line of fire alleging that the UPA and the previous NDA governments had favoured his company by giving contract on gas exploration in KG Basin and concessions at a huge cost to the exchequer. The nexus between politicians and industrialists was the main reason behind rising prices in India, India Against Corruption activist Arivind Kejriwal said on Wednesday.What is new in an exposure so hyped? It is the ultimate truth of Indian Economy and Polity based on exclusion and excommunication. So what if in their latest exposé, Arvind Kejriwal and Prashant Bhushan of IAC targetted both BJP's Atal Behari Vajpayee-led NDA as well as the Congress-led UPA for 'selling out the interests of the common man to corporates'. ONGC is a public sector company which explored oilfields in India with its resources and manpower. In return the government of India gifted away those oil blocks to private companies and trying hard to sell out ONGC. Indian media , civil society and media overlooked these developments right from the beginning. The magical rise of India incorporation is not a latest phenomenon at all. Neither it just happened after neoliberal turnaround. It is a continuous phenomenon since transfer of power.Neoliberal policies rather helped other minor parties to gain and shape up the India Incs to hijack governance, policy making and legislation to multiply the profit and expansion thousand times at the cost of Indian people and Indian nation.Open market economy set the ground of monopolistic aggression against Indian People just to plunder natural resources abundant.
The oil ministry postponed Wednesday's scheduled meeting for India's official auditor to begin audit of Reliance Industries' (RIL) KG-D6 oil and gas producing block.
The Comptroller and Auditor General (CAG) had called an Entry Conference for Wednesday with RIL and the oil ministry to begin its second round of audit that is to cover RIL's spending on KG-D6 gas fields during 2008-09 to 2011-12.
Official sources told IANS that the meeting was called off by the ministry earlier this week.
The IAC played out an audio tape purportedly of talks between lobbyist Niira Radia and former PM A B Vajpayee's foster son-in-law Ranjan Bhattacharya.
In the tapes, Radia and Bhattacharya were heard talking about the composition of the Union ministry.
Kejriawal said that both Congress and BJP were helpless against Reliance Industries chairman Mukesh Ambani. In 2000, the NDA had favoured Mukesh Ambani's Reliance in gas pricing, Kejriwal said.
Calling it a "classic case of crony capitalism", activists Arvind Kejriwal and Prashant Bhushan alleged that Reliance was "blackmailing" the government to increase the price of gas by "almost stopping" the production and indulging in "hoarding like petty traders".
Attacking the decision to shift S Jaipal Reddy from petroleum ministry, they alleged it was now "absolutely crystal clear" that he was eased out of the crucial ministry only on account of "pressure" from Reliance Industries.They said Reddy was "honest" and his "ouster" was only because he "actively resisted" Reliance' demand for an increase in the price of gas and wanted to penalise the company for "wilful reduction" of production of gas.
He asked why did Prime Minister Manmohan Singh not seek the opinion of the Attorney General when the then petroleum minister Manishankar Aiyar "refused to give in" to Reliance' demand for increasing the price of gas from $2.34 per unit to $4.2 per unit in 2006.
"In 2006, Aiyar was removed and Murli Deora was brought in and he cleared the files within one and half months. Why does he seek the opinion of Attorney General now? Why does his heart beats only for Reliance?" Kejriwal said.
New petroleum minister M Veerappa Moily refused to react to the allegations.
Kejriwal said it is always said that the Prime Minister is not involved in corruption but he comes under the purview of Prevention of Corruption Act for certain decisions taken by his government in various matters like 2G and coal block allocations.
After "exposing" Congress chief Sonia Gandhi's son-in-law Robert Vadra and BJP president Nitin Gadkari, speculation was rife throughout the day on Wednesday over the anti-graft body's next target.
Kejriwal and Bhushan had hit a high with their attack on the Haryana government for allegedly winking at DLF offering sweetheart deals to Vadra.
Reliance industries on Wednesday hit back at India Against Corruption Activist Arvind Kejriwal for his claims that Mukesh Ambani was controlling the government,. In its statement issued, Reliance said that statements made by IAC were devoid of any truth.
Reliance said that the KG D6 basin has best technology and that the project has added great economic value to the country.
"Allegations made by IAC are at the behest of vested interests," it said.
Indian finance minister and the corporate set of policy makers seem to be too stressed to enhance the growth rate and RBI is under tremendous pressure to formulate monetary policies to boost market. Whatever may be the growth rate or fiscal deficit, the growth rate of corporate Indian is amazing!As the poiltical powerlies within right there.It is quite an unfamiliar development that the Reserve Bank of India left interest rates on hold on Tuesday but cut the cash reserve ratio for banks, defying pressure from the government to lower rates for the first time since April but also indicating it may soon ease policy further. While the decision to leave the policy repo rate unchanged at 8.00 percent was in line with forecasts, expectations for a rate cut had grown after India's finance minister on Monday outlined a plan to trim the country's hefty fiscal deficit. RBI stood by its tough anti-inflation rhetoric by opting not to lower the key policy rate though preferred to trim the CRR as a step to lower funding costs and possible compromise. A rate cut in the face of jump in September WPI, sharp upward revision to historical numbers and recent rebound in the proxy core inflation measure, might have put the bank's inflation-fighting credibility at risk. Apparently not enthused by the RBI's cautious stance, Finance Minister P Chidambaram today said that growth is as much a challenge as containing inflation and government would "walk alone" to face the challenge if it comes to that.
Reliance Industries, the country’s largest listed company, and its chairman Mukesh Ambani came under the attack of India Against Corruption (IAC) activists Arvind Kejriwal and Prashant Bhushan today for allegedly “threatening the democratic structure of the country” by influencing appointment of ministers at will. Even the prime minister is powerless in front of the explorer’s might, the activists said in a crowded press conference at the Constitution Club here.Kejriwal, who started the proceedings in Hindi, alleged that Jaipal Reddy, who was the Union minister for Petroleum and Natural Gas till last week, was removed because he opposed a Reliance proposal to rise the price of the gas by over three times to $14.2 per mmBTU (million metric British thermal unit).
People should prevent this Government from granting a $14.25 per unit price to RIL by sending RTI applications to the new Petroleium Minister Veerappa Moily, the activist said.
“RIL has the contract to extract oil from KG (Krishna-Godavari) basin. Under an agreement of 2009 with the government, they are supposed to sell gas at $4.2 per mmBTU up to 31st March 2014. Midway now, RIL is demanding that the price be increased to $14.2 per mmBTU. Jaipal Reddy resisted that and he was thrown out,” Kejriwal said.
They added that Reddy was not the first to lose his job for taking on Reliance citing the instance of Murli Deora replacing Mani Shankar Aiyer in 2006. Aiyer, according to them, had resisted a RIL move to increase capital expenditure in the basin, which the activists said, reduced the government’s profits and enriched Reliance’s coffers.
Bhushan called for cancellation of all contracts awarded to Reliance be cancelled. “Consequences otherwise are horrendous. These crony capitalists are threat to our democracy itself,” he said.
According to IAC, if the hike in gas prices was allowed, it would result in a substantial increase in the cost of power for end consumers. “Today, power from gas based power plant costs around Rs 3 per KWH (kilowatt hour). If gas price is increased as demanded by Reliance power prices would go up to Rs 7 per KWH,” the activists said in a statement. Such escalation in prices could make most of these gas based plant unviable and would have to be shut down, the statement added.
Another key allegation was “goldplating” of capital expenditure of which the comptroller and auditor general said that there is strong evidence. The Initial Development Plan submitted by RIL in 2004 said it would produce 40 mmscmd for an investment of $ 2.39 billion. In two years RIL submitted another plan saying it would produce double gas for an investment of $ 8.8 billion. “Doesn’t that sound strange? To double production, you increase your investment by four times? Having put the initial infrastructure in place, it should have cost lesser to create additional production capacity.’’ Kejriwal asked.
In response, Reliance Industries said, “The statements made by IAC in the press conference today are devoid of any truth or substance whatsoever and are denied.”
The statement added that the deep water exploration project in the KG-D6 basin “has deployed the best technical resources and has been recognized by the oil and gas industry as one of the very best in its class. This project has added great economic value to the country and by all accounts is a project of which India can be justly proud.”
The apple of Ratan Tata's eyes, Tata Motors may be struggling under extreme competition from the likes of Anand Mahindra-led Mahindra & Mahindra, but today its he (probably), along with shareholders were pleasantly surprised by some good news from a global investment banking and securities firm.
* Goldman Sachs says the auto maker's market capitalisation has potential to reach $30 billion by fiscal 2017, from current value of $13.8 billion, and to nearly double its cash flow during these four years.
* To get there, Goldman says Tata's Jaguar Land Rover unit would need to move to a new platform for its existing models such as Range Rover and Discovery with a light weight aluminium architecture, thus improving key factors such as fuel efficiency or pricing.
* JLR would also need to make inroads into smaller engine and lower priced vehicles, as well as enter more premium segments, Goldman argues.
* However, challenges include getting consumers to buy into the brand, tightening regulations in key markets such as Europe, and overcoming macro economic uncertainties such as FX volatility.
* Goldman Sachs maintains Tata Motors at 'buy', with a target price at 334 rupees.
Tata Motors shares gain 1.4 percent after this news hit the markets.
"Growth is as much a challenge as inflation. If government has to walk alone to face the challenge of growth, then we will walk alone," the finance minister of India, P Chidambaram said in his reaction to the RBI's second quarter policy review.
Mind you,Arvind Kejriwal’s press conference today, in which he targeted Mukesh Ambani of Reliance Industries, is one more signal that politics and business cannot continue on the old assumptions: that it is something that should be done behind closed doors. Or that the public need no concern itself with these details.First post reports.
Thanks to a procession of scams – from 2G to CWG to Coalgate, Vadragate and Nitin Gadkari’s Purti capers – the credibility of politicians has never been lower. What Kejriwal did today was to link politicians to businessmen – you cannot have political corruption without a corporate side to it. And who better to tell this story with than India’s biggest businessman – Mukesh Ambani.
The businessman-politician linkage has been the elephant in the bedroom, and Kejriwal brought this out clearly, even though it is difficult to prove the nexus except through circumstantial evidence.
While it served Kejriwal’s purpose to paint both the Congress and the BJP with the same brush – which creates the space for his own political ambitions – the critical point is this: business cannot henceforth be done non-transparently.
Arvind Kejriwal’s press conference today saw him target Mukesh Ambani of Reliance Industries. Naresh Sharma/Firstpost
However, Kejriwal pushed the envelope too far when he tried to link broader ideological and macroeconomic issues with corruption and profiteering. He also took a giant leap from Reliance’s gas pricing lobbying to increases in power tariffs – another battle he is waging in Delhi.
Some of the ideological positions he staked out are also problematic. For example he and Prashant Bhushan are on record to say that natural resources should be auctioned. This was the entire basis for calling Coalgate a scam – even though favourtism to some of those allocated coal blocks for free is another angle that could be truly scandalous.
But the purpose of giving blocks for free was to keep power tariffs low. If coal blocks are given at market prices, power prices would rise. This does square with Kejriwal’s argument that power prices should be cut when coal blocks should be given out at market prices to mine developers.
He also missed out on economic points. It makes no sense to import gas at $14 and then deny the same price to domestic producers. This is exactly what is happening with ONGC. We import at $110, and give ONGC less than half that price. The net result is ONGC does not have enough resources to take up exploration and bring down our import dependence.
Kejriwal deserves kudos for bringing out the issue of a cosy relationship between politicians and businessmen, but the need is for transparency on government and corporate processes. The economics of selling coal or gas at less than market prices has its own costs.
http://www.firstpost.com/politics/kejriwal-breaks-the-silence-on-business-politics-links-510031.html
"Who is being exposed today is the question that IAC has been asked repeatedly since morning," said Prashant Bhushan.
Bhushan said no one individual but the 'entire rotten system' would be exposed by India Against Corruption (IAC).
"The working of the Indian political and business system has been entirely subverted and corrupted. The tentacles of this crony capitalist system has entered every facet of Indian society at the top of which Reliance is the leading representative," Bhushan said.
Loot from such corruption has given corporates like these overarching power over the Indian government, he said.
Kejriwal went on to add that the target of today's press meet was Mukesh Ambani's Reliance Industries.
Hurt by Kejriwal's allegations against party chief Nitin Gadkari, the BJP said they were at the behest of those who are funding him from abroad, a charge rejected by the social activist.
The editorial of the latest edition of Congress mouthpiece Congress Sandesh, as also BJP journal Kamal Sandesh, projected Kejriwal in poor light.
Kamal Sandesh said he has taken a "supari (contract)" from foreign sources and demanded that the Manmohan Singh government investigate the matter.
"After ruining the Anna Andolan and in pursuit of its naked ambition, Team Kejriwal is involved in a conspiracy to create suspicion about 'democracy' and by doing so it is definitely playing into the hands of those who have no attachment either to India or Bharat Mata," the article said.
Kejriwal had recently alleged that Gadkari's Purti Group has bought farmers' land at cheap rates from the government and also got irrigation water from the dam in Gosikhurd area of Vidarbha diverted to his sugar factory.
"The main game of Kejriwal may be related to funding. The thing to be known is whether the funds belong to India or to the forces which want to weaken the country," the publication said.
"One who could not remain loyal to Anna, how can he be loyal to the nation? He is engaged in digging holes in democracy with the help of foreign funds," it said.
Kejriwal has refuted these allegations and asked the BJP to come clean on its funding in the last ten years.
Arvind Kejriwal's press conference on Wednesday saw a minor interruption when a man from the audience alleged that the anti-corruption activist and his India Against Corruption group were "fooling the country".
As Kejriwal was addressing the media, alleging a nexus between politicians and industrialists, a man from the audience got up and loudly demanded to know why Kejriwal and his wife, an Indian Revenue Service (IRS) officer, never got transferred for 30 years. Kejriwal is a former IRS officer.
"I want to ask why you and your wife were never transferred out of Delhi," he asked.
The man, who did not identify himself but kept insisting that he was "alone" and not backed by anyone, was immediately surrounded by Kejriwal's supporters.
The man then shouted out loudly that "Kejriwal and company are fooling the country".
Some of his supporters started shouting anti-Kejriwal slogans. They were promptly evicted by IAC supporters.
Kejriwal, resuming his speech, said the interruption was "deliberate and planned".
Here are the highlights/quotes of the meet, including the scuffle:
* IAC targets 'scam' behind price hike: Kejriwal says, "Industrialist-politician nexus behind inflation, which has impoverished India."
* On tapes: AB Vajpayee kin Ranjan Bhattacharaya talks to Niira Radia on DMK-Bhattacharya asks Radia whom in DMK does she want in Cabinet.
* Vajpayee gave KG Basin contract to Mukesh Ambani
* Reliance got 45,000cr windfall gains
*Present government not being run by Manmohan Singh but by Mukesh Ambani
* Reliance held govt to ransom demanding higher gas price and when Jaipal Reddy demurred he was unceremoniously removed from ministership.
* Reliance started hoarding gas like 'Tuchcha dalals' creating artificial scarcity in India.
* Reliance wanted to set the price of gas and not govt - UPA fell in line.
* Mulri Deora favoured Reliance too
* Pranab Mukherjee gave Rs 10,000 cr windfall gains to Reliance
* Why did government favour Reliance?
* Reliance 'dadagiri' hit gas production in India.
* Mani Shanker Iyer was removed to serve the vested interests of the politicians.
*Chaos at Kejriwal presser as IAC men rough-up bystander for asking anti-Arvind question.
* Why transfer of Kejriwal and wife did not happen for 20 years asks bystander.
Kejriwal restores orders says, will answer that question but digresses.
*Man thrown out for asking Kejriwal personal question.
* Bhushan says people of the country must reclaim their rights and ensure that their interests are not subverted.
Arvind Kejriwal says, he does not expect govt to do any thing about IAC exposé.
The people of India must ensure they throw out both Congress BJP from power and reclaim their Constitutional rights.
Read full IAC report:
Kya Congress Mukesh Ambani ki dukaan hai?
* In 2006, Mani Shankar Iyer was removed and Murli Deora brought in to increase RIL capex from $ 2.39 billion to $ 8.8 billion and to increase gas price from $2.34 per mmBTU to $ 4.2 per mmBTU.
*In 2012, Jaipal Reddy has been removed and Moily brought in to increase gas prices from $ 4.2 per mmBTU to $ 14.2 mmBTU and to condone RIL’s blackmailing of reducing gas production.
* Huge benefits given to RIL in last one decade despite flagrant violations of various agreements by RIL. Benefits to RIL causing serious price rise in the country.
* Both BJP and Congress involved. BJP signed a sweet deal with RIL in 2000. Congress faithfully implemented it.
* If RIL demand of increasing the gas price to $ 14.2 is accepted, it would lead to shut down of several gas based power plants and increase in power and fertilizer prices. It would result in Rs 43,000 crores of additional benefits to RIL.
In the Nira Radia tapes, Ranjan Bhattacharya (Vajpayee’s son in law) is heard telling Nira that Mukesh Ambani told him –“Congress to ab apni dukaan hai.” Facts below show that both Congress and BJP are in his pocket.
Reliance Industries Ltd (RIL) has the contract to extract oil from KG Basin. Under an agreement of 2009 with the government, they are supposed to sell gas at $ 4.2 per mmBTU upto 31st March 2014. Midway now, RIL is demanding that the price be increased to $ 14.2 per mmBTU. Jaipal Reddy resisted that and he was thrown out.
Jaipal Reddy had prepared a note for EGOM, in which he mentioned that acceptance of RIL’s demand would mean an additional profit of Rs43,000 crores ($8.5 billion) to RIL(in 2 years) at current levels of low production. Most of this gas is used in fertilizer and power production. Increasing gas price would mean an additional financial burden of Rs 53,000Crores ($ 10.5 billion) on central and state government (copy of relevant page of EGOM note is attached as annexure 1). This would in turn mean higher electricity and fertilizer prices in the country or a higher subsidy burden.
In order to pressurize the government, RIL substantially reduced its production of natural gas. Total consumption of natural gas in the country is 156 mmscmd. According to agreement, RIL was supposed to produce 80mmscmd (more than 50% of the total demand) from 2009. However, they are producing just 27 mmscmd, almost a third of their commitment. Production has been artificially kept low to blackmail the government. They are not just hoarding the gas, but also forcing various consumers to buy gas from abroad. Gas from abroad costs around $ 13 per mmBTU.
RIL’s stand is simple – “hum to gas $14.2 par hi denge, lena hai to lo, nahin to jao.” Who does this gas belong to? According to Supreme Court of India and the Indian Constitution, this gas belongs to thepeople of India. Complete surrender of UPA before RIL indicates UPA’s inability to run governance in accordance with the Constitution.
Drastic reduction in production has forced many gas based power plants in the country to shut down or run at much lower capacity. According to media reports, almost 9000 MW of gas based power plants are lying idle
. Today, power from gas based power plant costs around Rs 3 per KWH. If gas price is increased from $ 4.2 to $ 14.2 as demanded by Reliance, power rates would go upto Rs 7 per KWH. That’s too expensive. At that cost, most of these plants would have to permanently shut down.
This is not the first time that a union minister has been eased out at Mukesh Ambani’s insistence. In 2006, when RIL had to get its capex increased from $ 2.39 billion dollars to $ 8.8 billion dollars, Mani Shankar Iyer was removed and a more Reliance friendly MurliDeora was brought in.
Brief history:
RIL got this contract during NDA regime in the year 2000. The contract was meant to favor RIL right from the beginning. In any business, increase in costs means decrease in profits. However, the NDA government , signed a contract dictated by RIL wherein an increase in cost by one rupee meant additional profits of RIL by almost Rs 2.2. Isn’t it strange? A parameter called Investment Multiple has been defined in the contract as under:
Investment Multiple (IM) = Total Revenue / Total Investment
According to the contract, till IM is below 1.5, RIL takes away more than 80% of profits and government gets less than 20% of profits. It is only when IM becomes more than 2.5 that government gets 85%. This means, RIL has a huge incentive to keep IM below 1.5 by increasing the expenditure artificially. Thus if Reliance were to increase expenditure from 1 Billion to 2 Billion on a revenue of 5 billion, their own net income would go up from 1.6 Billion to 3.5 Billion. This is what the CAG has stated in para 8.1 of its performance Audit of Hydrocarbon PSCs. (extract from executive summary of CAG as annexure 2)
In 2004, RIL submitted an Initial Development Plan (IDP) saying they would produce 40 mmscmd for an investment of $ 2.39 billion. All this happened when Ram Naik was the petroleum minister in Vajpayee regime.
Within 2 years, RIL submitted another plan saying they would produce 80 mmscmd for an increased investment of $ 8.8 billion. Doesn’t that sound strange? To double production, you increase your investment by four times? Having put the initial infrastructure in place, it should have cost lesser to create additional production capacity.
Mani Shankar Iyer, who was the then Petroleum minister, would not have allowed this. So, Mani was shunted out of petroleum ministry and Murli Deora, famous to be Reliance man, was brought in January 2006. Despite strong protests by some MPs like Tapan Sen, Deora approved $ 8.8 billion expenditure. By allowing $ 8.8 billion expenditure, in effect, Deora allowed a future revenue of over Rs 1 lakh crores ($ 20 billion dollars) for RIL.
CAG has remarked that there is strong evidence that RIL is gold plating its capital expenditure. Expenditure has been artificially increased (for reasons mentioned above). For instance, RIL is required to place orders for its plant, machinery and other requirements through international competitive bids. CAG alleges that bids were arbitrarily rejected to favor some parties. Just one company namely Aker group got many contracts (see annexure 3, which is an extract from CAG report). Is this group related to RIL? Is RIL siphoning off money through this method?
RIL’s pressure tactics:
RIL signed a contract with NTPC in 2004 to supply gas for its power plants at $ 2.34 per mmBTU for 17 years. It signed a similar contract with RNRL to supply gas at $ 2.34 per mmBTU. However, RIL went back on its word. Under RIL’s pressure, EGOM headed by Sh Pranab Mukherjee, revised gas price in September 2007 to $ 4.2 per mmBTU. NTPC and RNRL were forced to accept gas from RIL at revised price. By doing this, Pranab Mukherjee headed EGOM gave an undue benefit of Rs8000 crores to RIL.
What is RIL’s actual cost of production?
Cost of production is much less than $ 2.34 per mmBTU. (Copy of extracts from an SC order Annexure 4).RIL had actually signed long term agreements with NTPC and RNRL for supplying gas at that rate for 17 years. This means that at $2.34 per mmBTU also, RIL was making adequate profits. India is getting gas at $ 0.9 per mmBTU from Oman. Gas rates in Canada are at $ 1.74 per mmBTU. This means that at $ 2.34 per mmBTU also, RIL was making huge profits.
RIL sold out nation’s resources:
Ownership rights of this gas belong to the people of India. RIL is just a contractor hired by GOI to extract gas. Strangely, RIL sold 30% stake in 21 of 29 oil blocks to British Petroleum in July 2011 at $ 7.2 billion. Government gave approval to RIL to do that. How can they do that? It is almost like – I hire a driver to drive my car and that driver sells off my car after a few days.
Performance of RIL so far has been much worse than perhaps the worst performing government department.
1. 4 times cost escalation within 2 years from $ 2.39 billion in 2004 to $ 8.8 billion in 2006.
2. Increase in gas price from $ 2.34 per mmBTU in 2004 to $ 4.2 per mmBTU in 2007 to the present demand of $ 14.2 per mmBTU.
3. Capacity created for producing 80 mmscmd after incurring such a huge cost ends up producing just 27 mmscmd after 12 years.
4. 31 oil wells should have been in production till now. Out of them, just 13 are functional.
Has any government department fared as badly? If this had happened in any government department, it would have been ripped apart by all government agencies and media.
RIL scam akin to coal scam:
This scam is on similar lines as Coal block allocation scam. Coal blocks were given away saying that coal production was less in the country and private sector participation would increase coal production. Rather than produce coal, the private parties hoarded coal blocks to sell them at appropriate time in future.
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