Dasgupta fires fresh salvo against Moily

Says the petroleum ministry is stalling on a $1-bn fine imposed on Reliance Industries

The petroleum and natural gas ministry is sitting on a proposed penalty of $1 billion imposed on Reliance Industries Ltd (RIL) in 2011-12, said Communist Party of India (CPI) leader Gurudas Dasgupta. The Veerappa Moily-headed ministry also failed to implement relinquishment of 86 per cent of KG-D6 block area held by RIL, Dasgupta added.

Earlier, the CPI leader had accused Moily of favouring Mukesh Ambani-led RIL by pushing for a gas price hike, saying it would cost the exchequer an additional subsidy burden of Rs 76,000 crore. In response to that, Moily had said that an import lobby is working against the gas price hike.

Responding to this, Dasgupta said, “I am not part of any lobby. By the way, the only two companies importing gas in India are two public sector undertakings — GAIL and Petronet LNG. Are they part of the import lobby?”

When Jaipal Reddy was petroleum minister, a fine of $1 billion was imposed on RIL to restrict cost recovery due to shortfall in production up to 2011-12. “An arbitration procedure was about to be initiated, but once Moily has taken over as minister, the process is being stalled and he is sitting on it to favour RIL. The principle of Reddy was that if capital investments have been made for a certain level of production and the same is being done, then we should proportionately reduce the cost recovery permitted,” said Dasgupta.

The 2011-12 penalty was based on principle of reduced production leading to a reduction in capital costs allowed since assets were under-utilised. According to the Dasgupta’s calculation, considering the drop in production to 15 million standard cubic metres per day (mscmd) against the required level of 80 mscmd now, the penalty is likely to touch $3 billion. “No notice for restricting cost recovery based on the falling production of 2012-13 and this year,” he said in a letter to Prime Minister Manmohan Singh, while asking to impose fresh penalties on the company for falling productions.

Training guns on Moily for inaction in taking back the KG-D6 area according to contract provisions, he said, “The Comptroller and Auditor General had first asked for it. Even the Directorate General of Hydrocarbons had recommended that 86 per cent of the entire RIL area should be relinquished as per provisions of the contract. The petroleum minister is now preparing the ground for over-ruling the DGH saying that he would not like to look into technicalities,” Dasgupta pointed out.

According to him, due to the fall in production from KG-D6, the loss in power production translates into 13,600 mega watt (MW) this year and in terms of potential shortfall in urea production, it would translate into 32.5 million tonnes.  He added that this lost production would be substituted by costly imported gas and it would imply a loss of Rs 49,000 crore in the current financial year. “If we look at the total shortfall in the last two financial years and this year, the total loss will translate into Rs 1,10,000 crore,” he added.

Responding to Dasgupta’s allegation, Moily had told Business Standard last week, “If someone thinks that I am here to help Reliance, history will speak against him. I was law minister when there was a legal battle (RIL versus Anil Ambani group’s Reliance Natural Resource Ltd case) in which Reliance was involved. I can very well say that I was responsible for the Supreme Court to lay down a law saying that natural resources belong to the nation. If I wanted to help Reliance or if that lobby played on me, I could have supported them.”
THE FACE-OFF

GURUDAS DASGUPTA
CPI leader

• If Moily’s formulae on gas price is implemented, it would cost an additional subsidy burden of Rs 76,000 crore. Moily is working in favour of Reliance
• I am not part of any lobby. By the way, the only two companies importing gas in India are two public sector undertakings, GAIL and Petronet LNG. Are they part of the import lobby?
• An arbitration procedure was about to be initiated over a penalty of $1 billion on RIL. Once Moily took over as the minister, the process is being stalled and he is sitting on it to favour RIL

M VEERAPPA MOILY
Petroleum minister

• If someone thinks that I am here to help Reliance, history will speak against him
• An import lobby is working against gas price hikes and it is threatening every oil minister
• I was law minister when there was a legal battle (between Reliance Industries and Anil Ambani group’s Reliance Natural Resource Ltd) in which Reliance was involved. I can very well say that I was responsible for the Supreme Court to lay down a law saying that natural resources belong to the nation. If I wanted to help Reliance or if that lobby played on me, I could have supported them