GAS WARS: CRONY CAPITALISM AND THE AMBANIS
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A Storm over the KG Basin
1A year and a half later, when Jaipal Reddy was removed from the post of minister of petroleum and natural gas and made science and technology minister, many believed that his portfolio had been changed by the prime minister because of ‘pressure’ from Mukesh Ambani.
2What was ironical was that Firstpost.com is part of the Network 18 group in which RIL made significant financial investments in January 2012.
3The final version of the report tabled in Parliament three months later on 8 September 2011 was four pages longer.
4The so-called ‘Deepwater Horizon’ explosion in the Gulf of Mexico in April 2010 killed 11 people and resulted in nearly five million barrels of oil being spilled thereby seriously threatening marine life and ecology along a few hundreds of kilometres of coastline.
Murky Deals, Muddy Waters
1Gold-plating, as has been explained before, signifies excessive and often unnecessary expenditure on features and refinements to equipment or projects to inflate costs.
2That the CAG of India refused to buy these arguments is another story that will follow.
3More on the arbitration issue will follow.
The Insider
1A Fortune 500 company, the ONGC used to produce around three-fourths of India’s crude oil and a little under half of the country’s natural gas. Set up in August 1956 by the Indian government originally as the Oil and Natural Gas Commission, the ‘commission’ became a ‘corporation’ in June 1993. In late-2009, RIL, headed by Mukesh Ambani, overtook ONGC in gas production. Nevertheless, the public sector enterprise remains among India’s largest corporate entities in terms of assets, turnover, sales and profits. On 18 June 2013, in terms of market capitalisation or the total value of all shares of a company multiplied by its price at a particular point in time, RIL overtook ONGC as the second-most ‘valuable’ company in India after information technology and computer software bigwig, Tata Consultancy Services.
2Col. S.P. Wahi, who headed ONGC between 1981 and 1989, told this book’s lead author in an interview at his residence in Gurgaon, a suburb of Delhi, that if he had had his way the exploration of hydrocarbons would never have been ‘handed over’ by the government to the private sector.
3Petronet LNG had been formed as a joint venture with an authorized capital of Rs 1,200 crore or $240 million by the government of India to import LNG and set up LNG terminals in the country with public sector promoters, GAIL (India) Limited, ONGC, Indian Oil Corporation Limited and Bharat Petroleum Corporation Limited and with France’s national gas company Gaz de France or GDF as a strategic partner. Ras Laffan Liquefied Natural Gas Company Limited or RasGas of Qatar has signed an LNG sale and purchase agreement (SPA) with Petronet LNG for the supply of LNG to India.
A Gas Policy of Hot Air
1He was prescient for he could not possibly have anticipated that two and a half years later, the CAG’s findings would expose the way in which the PSC was weighted in favour of RIL.
The KG Basin is ‘Sinking’?
1http://www.isprs.org/proceedings/XXXVIII/8-W3/b2/19-KNageswaraRao.pdf
Indian Style Crony Capitalism
1It was calculated that if the Planning Commission’s formula was used to price gas, over a five year period, the government’s subsidy outgo would rise to Rs 53,280 crore—over and above the subsidy incurred if the Rangarajan formula was to come into effect—with an enhanced profit of Rs 48,000 crore for Reliance.
2LNG prices in Japan are among the highest in the world.
3Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution.
Price of Gas: End-game or New Beginning?
1http://www.observerindia.com/cms/sites/orfonline/html/aboutus/ profiles/mohan.html
Moily Brazens it Out
1The lead author of this book is a member of the governing council of ‘Common Cause’, and the late H.D. Shourie’s son is Arun Shourie, who is not associated with the civil society organisation.
2As already stated, the arbitration proceedings against RIL relate to the recovery of a penalty of $1 billion for the fall in gas output allegedly because the company had deliberately not dug enough wells that had been imposed upon the company on the advice of the solicitor general of India when Jaipal Reddy was petroleum minister. RIL and the government had respectively nominated former chief justices of India S.P. Bharucha and V.N. Khare.
Politics of Crony Capitalism
1The lead author of this book is associated with Common Cause as a member of its governing council.
First published in India in 2014 by:
Paranjoy Guha Thakurta
paranjoy@gmail.com
Copyright © Paranjoy Guha Thakurta 2014
ISBN: 978-81-928551-3-4
Paranjoy Guha Thakurta asserts the moral right to be identified as the author of this work.
Cover design: PealiDezine
Distribution: AuthorsUpFront & FEEL Books
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