Dr Vijay Kelkar borrows heavily from pro-Reliance lobby report

Renowned economist Dr Vijay Kelkar, who's been the secretary (oil and finance) in the past, has repeated verbatim a privately commissioned report that lobbies for big corporates including Reliance, in his latest report on the hydrocarbon sector called 'Roadmap for reduction in import dependency in Hydrocarbon sector by 2030'.

The Kelkar report, submitted to the petroleum ministry in January 2014, has lifted verbatim material from an Association of Oil and Gas Operators (AOGO) report.

AOGO represents the group of oil and gas explorers which has interest in the Indian hydrocarbon sector, including private as well as government companies. Among its members is Reliance Industries, which is the operator of the controversial KGD6 basin natural gas block.

dna picked up nine such cut and paste instances in the Kelkar report, some of which are quoted below.

The AOGO, in its report, vouched for having Production Sharing Contract (PSC) regime for the Indian oil & gas sector. The Kelkar Committee, in its report, espouses the recommendation of AOGO.

The most important para in the report that justifies the PSC regime in the hydrocarbon sector has been picked from the AOGO report.

In Chapter 2.3, the Kelkar Committee report begins with a question, "Are contractors incentivized to Gold Plate in PSC environment?"

In the following para, the report justifies the PSC regime by arguing that no company would like to indulge in 'gold plating'as it was not "incentive–compatible as every dollar of unwarranted expenditure would need to be recovered from the project revenues" and which would adversely impact contractor returns. This is from the AOGO report.

The report goes on to say the Indian PSC regime was transparent and "in such a transparent process, any investor who assumes 'gold plating'in his bid would not be able to offer competitive terms and will not ab-initio not win. Hence there is no incentive for a profit maximising firm to gold-plate under a PSC framework".

Kelkar, however, justified this. "We have acknowledged the associations and stakeholders in our report. AOGO and other corporates who have given their presentations are not terrorists that we cannot take up their views in our report," he said.

But Kelkar in his acknowledgement doesn't say that he's quoting verbatim from the AOGO report. Instead, it reads: "The Committee thanks AOGO and BCG for sharing with the committee the workings of the detailed Monte Carlo simulation of Indian basins and data related to 1,132 fields respectively. The analysis of the data and the findings are however carried out by the committee itself."

Now the question is if Kelkar Committee analysed all data, why did it report verbatim from the AOGO report?

The CAG had pulled up the petroleum ministry for offering production sharing contract (PSC) to RIL and losing out revenue as the contract allowed incentive for higher capital expenditure.

The CAG report said PSCs between the government and operators were designed to encourage increasing capital expenditure by private contractors, which reduces the government's share.

Under the PSC regime, the contractor first recovers his expenditure before sharing profit. This gives an incentive to oil and gas explorers to not control expenditure while developing a block.

Most developed nations do not follow the PSC regime and instead choose revenue sharing model. The UPA government is accused of bowing down to RIL pressure and approving a 100% increase in the price of natural gas in the country.

The Kelkar Committee's report is pitched against another report prepared by a committee, headed by economist and PM's economic advisor C Rangarajan. While Kelkar batted for PSC, Rangarajan proposed a revenue sharing regime with the operator company.