Buyout purely commercial, not forced by Narendra Modi: GSPC

GSPC on Friday denied that its possible buyout by ONGC was being forced by the Narendra Modi government.

The Gujarat State Petroleum Corporation (GSPC) on Friday denied that its possible buyout by the Oil and Natural Gas Corporation (ONGC) was being forced by the Narendra Modi government to save the Prime Minister.

The GSPC on Friday rejected Congress' charge of a Rs 20,000 crore scam in its alleged forced purchase by the ONGC, saying that the negotiations between the two companies were happening on "purely commercial basis with a view to achieve business synergies."

It was referring to the allegations on Tuesday by Congress spokesman Jairman Ramesh that Union Petroleum Minister Dharmendra Pradhan was "forcing" the state-owned ONGC to buy the Gujarat government firm's gas block in KG basin to "protect" Modi.

The Congress leader alleged that Modi as Gujarat Chief Minister had made GSPC borrow Rs 20,000 crore after making big claims in 2005 that the state-owned blue chip company had struck 20 trillion cubic feet (tcf) of gas reserves. After 11 years, the find was only one trillion cubic feet.

Jairam Ramesh claimed had GSPC had "squandered" its borrowings, was "bankrupt" and therefore unable to repay. And so the firm was now being forced down the throat of ONGC.

However, the GSPC said in its statement on Friday that "the discussions between the two companies are taking place on purely commercial basis. The objective being to achieve business synergy between the resources of ONGC and GSPC for achieving more domestic production of oil and natural gas by carrying out further development of GSPC's KG Block".

It said that ONGC was also operating an adjoining block in the KG basin which is due for development where the technological breakthrough achieved by GSPC in its KG Block could be of immense help for expediting the development.

Ramesh had alleged that Pradhan has ordered a "surgical strike" on GSPC through ONGC as the Gujarat government undertaking owes Rs 20,000 crore to 15 banks.

Denying Congress' charge that an attempt was being made to hide a scam, GSPC said: "The acquisition of stake by ONGC into GSPC's KG Block is meant for achieving synergy for securing energy security for India."

It said the loans advanced by the banks to it were done after "proper assessment" by lenders.

"In fact, GSPC had availed services of SBI Capital Markets (a subsidiary of SBI - a Government of India undertaking) for arranging the loan financing for GSPC. SBI Caps has also assisted the banks in evaluation before lending funds to GSPC.

"The proposals for lending to GSPC were cleared by the Board of Directors of the respective lending banks during the tenure of UPA government," it said.

GSPC said it has always carried out timely servicing of its loans. "GSPC has never ever defaulted even for a day in servicing its loans."

Ramesh had alleged that there have been four Comptroller and Auditor General (CAG) reports on GSPC scam, and yet there have been no comments from the government on them.

To this, GSPC said all the comments of the CAG pertaining to it and its operations have been tabled before the Gujarat Assembly and reports have been discussed in the Public Undertakings Committee.