Gas pricing: Govt bent rules for RIL, says ex-IAS officer

EAS Sarma's letters against Mukesh Ambani-led firm now in public domain

In what could spell fresh trouble for a government saddled with allegations of corruption, a series of letters from a civil servant points to apparent irregularities by the Centre in auditing the capital costs and allowing price and other concessions to Reliance Industries Ltd in the Krishna-Godavari Basin.

EAS Sarma, a former Adviser (Energy) to the Planning Commission and Secretary to the Ministry of Finance and Ministry of Power, who has addressed these letters to the Prime Minister, claims that not one of them evinced a response from the PMO.

The key allegations levied by Sarma include keeping the Petroleum & Natural Gas Regulatory Board out of the domain of gas pricing, and bestowing upon Reliance and other players a monopolistic hold over the pricing of gas. Sarma now wants these letters to be placed in the public domain.

Click on the links below to view the letters in chronological order. All letters are addressed to the Prime Minister unless otherwise indicated:

Letter dated July 14, 2007
Letter dated June 30, 2009
Letter dated July 13, 2009
Letter dated August 3, 2009
Letter dated August 9, 2009 (addressed to Comptroller & Auditor General of India)
Letter dated August 12, 2009
Letter dated August 22, 2009

The company's position:

In an interview dated September 7, 2009, Reliance Industries Director PMS Prasad, who has headed RIL’s petroleum business for many years, had addressed many charges laid at the company's door.

Prasad had said then, that the gas price of $4.20 per million British thermal unit was fair, and in any case lower than what was being paid by companies in other deals. He had argued that Reliance’s capital cost for developing the D6 gas field compared very favourably with other such fields.

He had asserted that Reliance offered a fair deal to NTPC which, however, did not accept it and went to court; he said that NTPC was the loser, because it was buying more expensive gas from elsewhere.

Prasad had also denied the charge that Reliance had stalled any audit of its costs by the Comptroller and Auditor General, arguing that there was no contact with CAG till April this year.

Prasad insisted that Reliance had not got the credit it deserved for having improved the country’s energy security by producing so much gas, in such quick time, from a field where others had failed to find gas.