India Together: Natural gas, unnatural realities - 25 January 2013


Natural gas, unnatural realities
Veteran journalist Paranjoy Guha Thakurta's forthcoming book tentatively titled Gas Wars: Ambani brothers and the fight for India's natural resources, co-authored by Subir Ghosh delves into the unholy world of crony capitalism in India, writes Satarupa Bhattacharya.

25 January 2013 - Public memory is famously reputed to be short-lived and what better proof of it than in a country as ours, where scams surface every other day, seriously jolt and shame national consciousness, create a furore and then slowly but inevitably get sucked into the morass of acceptance and resignation. Around the middle of 2011, a Comptroller and Auditor General (CAG) draft report bearing the results of an audit of the Production Sharing Contracts related to on-shore and off-shore oil and gas blocks was widely reported by media. It brought into the open concrete evidence of a dubious nexus between government and big private players, most prominently Mukesh Ambani-led Reliance Industries Ltd. While the glare of electronic media and the general feeling of outrage have since characteristically subsided, the conscientious can now look forward to a detailed exposition of the murky realities behind the government's deal with the Reliance Group involving extraction of natural gas from the Krishna-Godavari (KG) offshore basin. Backed by years of research that took roots long before the CAG report became public, veteran journalist and academic Paranjoy Guha Thakurta delves into the unholy world of crony capitalism in his forthcoming book tentatively titled Gas Wars: Ambani brothers and the fight for India's natural resources , co-authored by Subir Ghosh, a journalist and author with over 20 years of work experience. The book will be published by HarperCollins and is expected to be released sometime in the second half of 2013. In 2004, two years after iconic entrepreneur Dhirubhai Ambani died intestate, the rivalry between sons Anil and Mukesh Ambani erupted out of the boardroom and into the open, generating significant public and media interest, scorn and power-peddling. The common view was that the ugly sibling clashes were an inevitable outcome of the tussle over ownership of the huge empire that their father had carved; however, it was only a discerning few – such as the author – who actually grasped that the key bone of contention was the control over the mining and marketing of India's natural resources, more specifically the unexplored gas reserves in the Bay of Bengal off the south-eastern Indian coast. In May 2010, much to the chagrin of younger brother Anil Ambani, the Supreme Court of India awarded the control of these natural gas resources to Mukesh's Reliance Industries. This set the context for the ensuing exploitation of public resources in connivance with top government officials, who not only condoned, but actively created scope for subverting fair and equitable distribution, the dynamics of which is what the volume highlights, says Guha Thakurta. Guha Thakurta is a seasoned and informed observer of India's political economy. Describing the book in detail, he says he uses the draft CAG report as just one of his reference points to raise critical issues that highlight the loopholes not just in this contract in particular, but in the overall framing of rules and procedures that encourage a culture of favouring a few at the cost of many. The author also gave a talk about the book at the Indian Institute of Management, Bangalore, in November 2012. From a conversation with the author, it emerges that several questions may be raised based on the damning findings of the CAG that clearly show how the Production Sharing Contract (PSC) with Reliance is deeply biased in favour of the private operators and actually provides an incentive for them to inflate capital costs resulting in a dent in the government's share. To cite a few: Why did the Directorate General of Hydrocarbons approve an increase in capital costs from $2.4 billion to $8.5 billion for a mere doubling of production and that too, in a record 53 days? Why were areas not developed within the stipulated time allowed to be designated as “discovery area” in blatant violation of the terms of the PSC? Even beyond the perverse terms of the PSC exposed by the CAG, one cannot but question how an Empowered Group of Ministers (EGoM) headed by Pranab Mukherjee (then external affairs minister) in 2007 set the price of Reliance gas at an exorbitant $4.2 per MBTU when Reliance had itself admitted in a court case that the cost price of its gas was $1.43 per MBTU and had also expressed concurrence in selling gas to NTPC at $2.34. The findings in the public domain and the deeper questions pertaining to propriety and transparency that arise from them are legitimised and corroborated in the book by exclusive interactions and revelations. The author discloses that the edition will feature a last interview with former chairman and managing director of the government-owned ONGC, the late Subir Raha, as well as an exclusive, unreported speech made by a former Union Minister for Petroleum with reference to the cloud around the administered price of gas set by the EGoM. Paranjoy Guha Thakurta's credentials as a man of letters and his insight into and knowledge of the Indian political, economic and sociological environment require no introduction or endorsement. He was one of the first journalists to write about the telecommunications (2G) spectrum scandal in November 2007 and was also one of the petitioners in the public-interest litigation on the subject in the Supreme Court of India. It is therefore not unreasonable, perhaps, to expect that his acute understanding of the realities of the KG-D6 scam in particular, and of the overall underbelly of liberalisation in general, as detailed in the forthcoming book will raise

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htm 2 of 2 8/19/2013 8:16 PM . But the enormity of it is greater when government policies and norms are actually devised and implemented in a way that benefits a privileged few and allows predatory capitalism to spread its roots.25 January 2013 http://www. She wrote this article based on material released to India Together by the authors of the Therein lies the deep and more permanent significance of Gas Wars: Ambani brothers and the fight for India's natural resources.indiatogether. URL for this article: http://www.cgi awareness about a system where apparently rational laws and policies leave huge room for exploitation and cronyism. unnatural realities . ⊕ Satarupa Bhattacharya 25 Jan 2013 Satarupa Bhattacharya is a Bangalore-based journalist.indiatogether.India Together: Natural It is important therefore that such practices are not perpetuated in the shadows of fickle media and public attention span. It is a worrisome reflection on the government of the world's largest democracy that it is unable to protect and distribute the resources that rightfully belong to its people.

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