Quelling the Reliance flare-up will take drastic measures - II
The information to clear many of the doubts nagging the minds of people on the crucial issue relating to the very important national resource is not easy to come by.
The information to clear many of the doubts nagging the minds of people on the crucial issue relating to the very important national resource is not easy to come by, although the Right to Information Act is in place and the government boasts of being highly transparent in its actions.
A former IAS officer, EAS Sharma, says he is struggling to secure information from the Cabinet secretariat and the ministry of petroleum and natural gas under the Right to Information Act, 2005 about the investments made by RIL in the KG basin and the unit cost of production there. The information he is seeking is very important to know the benefit the company is deriving from the extraction of this very precious commodity, natural gas, and at what cost.
Withholding the information or providing misinformation is not going to pacify those who are fighting for a cause — ensuring maximum benefit to the people. Providing accurate information would increase the credibility of the government, whereas a passionate rebuttal of the criticism without substantiating with evidence will only prove counterproductive.
The Director General of Hydrocarbons V K Sibal’s claim that the CAG too had audited the Reliance contract raised many an eyebrow when the CAG sources denied having done the job as they could not gain access to the records.
True, Sibal’s claim that the gas find of that order by the RIL in the KG basin was the largest discovery in the world for 2002 is a cause for celebration; it would have been hailed and cherished in any other country’ as expected by him. The peak production from here, Sibal said, envisaged at 80 million metric cubic metres per day (mmscmd) — about twice the current national gas production. But that jubilation would have been in India too if the people felt the fruits of the discovery reached them.
Let alone the people, the government of Andhra Pradesh too is not happy because the state is not getting its due share although the gas has been found off Andhra coast. Sibal’s suggestion that Andhra Pradesh can produce “more than 120 million cubic metres of gas which was just tip of the iceberg and the opportunity is much higher than that,” would have pacified a tyro but not a seasoned politician like Y S Rajasekhar Reddy who might not be publicly expressing his dissent adequately being a Congress politician.
However, the Andhra Pradesh government has now, after a lot of hullabaloo in the state over its inaction, rather, for not emulating the Gujarat government’s example of participating in the exploration, has set up a gas infrastructure corporation. Though this action might help avert public attention from the issue for a while, it cannot impact on the approach of the Government of India’ policy on exploration, the root cause of the present imbroglio. It is thus unlikely to bring full benefit to the state or undo the damage already caused to the people.
All said, RIL will at best, implement the production sharing contract in all earnestness, but do little else. This is because the business house has no other interest but to maximise its profits. According to the PSC, RIL will have access to 90% of the total output during the initial phase of the production from the field. This is to compensate it for its investment in developing the field. The government’s share will increase to 16% once RIL’s return from the field exceeds 1.5 times its initial expenditure. Subsequently, the share will go to 28% when RIL’s return surpasses 2 times its initial expenditure and 85% when it exceeds 2.5 times initial expenditure.
So, the share to the resource-bearing states is possible from the 10% accruing to the Centre. If the recommendation of the Twelfth Finance Commission is honoured, the Centre should pass on half of profit petrol and gas — that is, 5% from the profit gas, at present.
As for royalty to the states, the existing law provides for it only with regard to the onshore but not offshore operations. The Supreme Court struck down the states imposing taxes, on royalty on the offshore oil, which they used to do till 1991, since the practice came into conflict with the existing law.
It is therefore imperative to look at the whole gamut of exploration policy and the existing law, which is anomalous to the resource bearing states in particular and to public interest in general.
Already, 222 blocks have been awarded covering 41.74 square kilometres under the NELP in seven rounds till 2008.
Now the eighth round is underway in which 70 blocks covering 1.63 lakh sq km are on offer.
The dispute of the Ambani brothers, which is before the Supreme Court, the complaints of inflated investments, fixing of low price, underproduction etc, which are widely commented upon, are not mentioned here again to avoid repeated discussion. But that is not to say those things should be ignored. All these matters should be examined and investigated to satisfy the doubts in the minds of people.
Also, the NELP and the existing laws should be reviewed and changes effected in such a way that oil and gas production, which is of crucial importance to the economy, is put outside the ambit of profiteering by private business. Similarly, the newer policy cannot ignore the long-term costs like environmental degradation, immediate problems like the right compensation to the local people who are displaced, etc.
The Reliance imbroglio is unlikely to be sorted out till such drastic measures are taken up by the Centre in consultation with all the state governments and all others concerned and after a thorough public debate.
(Concluded)
A former IAS officer, EAS Sharma, says he is struggling to secure information from the Cabinet secretariat and the ministry of petroleum and natural gas under the Right to Information Act, 2005 about the investments made by RIL in the KG basin and the unit cost of production there. The information he is seeking is very important to know the benefit the company is deriving from the extraction of this very precious commodity, natural gas, and at what cost.
Withholding the information or providing misinformation is not going to pacify those who are fighting for a cause — ensuring maximum benefit to the people. Providing accurate information would increase the credibility of the government, whereas a passionate rebuttal of the criticism without substantiating with evidence will only prove counterproductive.
The Director General of Hydrocarbons V K Sibal’s claim that the CAG too had audited the Reliance contract raised many an eyebrow when the CAG sources denied having done the job as they could not gain access to the records.
True, Sibal’s claim that the gas find of that order by the RIL in the KG basin was the largest discovery in the world for 2002 is a cause for celebration; it would have been hailed and cherished in any other country’ as expected by him. The peak production from here, Sibal said, envisaged at 80 million metric cubic metres per day (mmscmd) — about twice the current national gas production. But that jubilation would have been in India too if the people felt the fruits of the discovery reached them.
Let alone the people, the government of Andhra Pradesh too is not happy because the state is not getting its due share although the gas has been found off Andhra coast. Sibal’s suggestion that Andhra Pradesh can produce “more than 120 million cubic metres of gas which was just tip of the iceberg and the opportunity is much higher than that,” would have pacified a tyro but not a seasoned politician like Y S Rajasekhar Reddy who might not be publicly expressing his dissent adequately being a Congress politician.
However, the Andhra Pradesh government has now, after a lot of hullabaloo in the state over its inaction, rather, for not emulating the Gujarat government’s example of participating in the exploration, has set up a gas infrastructure corporation. Though this action might help avert public attention from the issue for a while, it cannot impact on the approach of the Government of India’ policy on exploration, the root cause of the present imbroglio. It is thus unlikely to bring full benefit to the state or undo the damage already caused to the people.
All said, RIL will at best, implement the production sharing contract in all earnestness, but do little else. This is because the business house has no other interest but to maximise its profits. According to the PSC, RIL will have access to 90% of the total output during the initial phase of the production from the field. This is to compensate it for its investment in developing the field. The government’s share will increase to 16% once RIL’s return from the field exceeds 1.5 times its initial expenditure. Subsequently, the share will go to 28% when RIL’s return surpasses 2 times its initial expenditure and 85% when it exceeds 2.5 times initial expenditure.
So, the share to the resource-bearing states is possible from the 10% accruing to the Centre. If the recommendation of the Twelfth Finance Commission is honoured, the Centre should pass on half of profit petrol and gas — that is, 5% from the profit gas, at present.
As for royalty to the states, the existing law provides for it only with regard to the onshore but not offshore operations. The Supreme Court struck down the states imposing taxes, on royalty on the offshore oil, which they used to do till 1991, since the practice came into conflict with the existing law.
It is therefore imperative to look at the whole gamut of exploration policy and the existing law, which is anomalous to the resource bearing states in particular and to public interest in general.
Already, 222 blocks have been awarded covering 41.74 square kilometres under the NELP in seven rounds till 2008.
Now the eighth round is underway in which 70 blocks covering 1.63 lakh sq km are on offer.
The dispute of the Ambani brothers, which is before the Supreme Court, the complaints of inflated investments, fixing of low price, underproduction etc, which are widely commented upon, are not mentioned here again to avoid repeated discussion. But that is not to say those things should be ignored. All these matters should be examined and investigated to satisfy the doubts in the minds of people.
Also, the NELP and the existing laws should be reviewed and changes effected in such a way that oil and gas production, which is of crucial importance to the economy, is put outside the ambit of profiteering by private business. Similarly, the newer policy cannot ignore the long-term costs like environmental degradation, immediate problems like the right compensation to the local people who are displaced, etc.
The Reliance imbroglio is unlikely to be sorted out till such drastic measures are taken up by the Centre in consultation with all the state governments and all others concerned and after a thorough public debate.
(Concluded)