 "High On Oil: Top 5 Bidders")
It was not a big corporate leader or a multi-national that emerged as the largest bidder in the recently concluded bidding round of small oil & gas contract areas. Bengaluru-based
start-up Akhil Teja Natural Resources (ATNRL) surprised many in the government and the petroleum sector with its bids for 17 blocks or half the total number that attracted bids.
When the bidding window closed on November 21, ATNRL was barely three days old. Records with the ministry of corporate affairs (MCA) showed that the company floated by three principal shareholders Erubothu Akhil Teja, Erubothu Venkataiah and P Lakshmi was incorporated on November 18. The incorporation took only seven days, having been
completed under the fast-tracked Spice (Simplified Proforma for Incorporating Company Electronically).
The firm operated out of the Bengaluru residence of Venkataiah, a 1985 batch Indian Administrative Services (IAS) officer of the Karnataka cadre. Now retired, Venkataiah serves as a special advisor to the Social Welfare Department of the state government.
Records submitted with the MCA showed that the company had a paid-up capital of Rs 1 lakh. Venkataiah’s son Akhil Teja was the largest shareholder with 5,100 shares. Twenty-seven-year-old Akhil Teja, a mechanical engineer by qualification, recently quit his bank job to pursue his interests in oil exploration. Teja is said to have been inspired by the roadshows by the ministry of petroleum and natural gas.
High On Oil: Top 5 Bidders
In the run-up to the bidding, Union Petroleum Minister Dharmendra Pradhan had said the government wanted to create a start-up environment in the oil exploration & production sector. The policy has seen not only new players to oil such as Dilip Shanghvi and Essel Group showing interest but also unknown companies putting in aggressive bids.
Little-known firms such as Gem Laboratories, Megha Engineering, Ramayana Ispat, Duggar Fiber, Invenire Energy, Gopalka Savings and BDN Enterprises have also come
forward. Every company will need a net worth of at least $1 million to be eligible for the blocks and also will have to submit a bid bond of Rs 10 lakh for every contract area that it bids.
ATNRL, for instance, needed a bid bond of Rs 1.7 crore. Companies were also required to submit a bank guarantee of Rs 1 crore for each bid.
An e-mail sent to ATNRL’s official e-mail on why it was interested in oil blocks did not elicit any response. When contacted on the phone, Venkataiah confirmed the bids. “A minister came to Bengaluru for a roadshow and my son was there and he got interested. Following this, he must have applied.” Teja could not be reached for comment. His father said he “was in Delhi for meetings”.
Venkataiah himself owns 3,900 shares, while his wife Polukonda Lakshmi owns the remaining 1,000 shares. The objects clause of the company said: “To carry on the business of exploration, extraction and processing of natural resources and value addition of natural resources products & trading in natural resources & providing allied services in relation to natural resources.”
Once the blocks are allotted, bidders like ATNRL will have to invest at least Rs 30 crore for development of each on-land block and Rs 50 crore for each offshore block. While the ministry has been keen on getting in start-ups in the exploration sector, officials are anxious to ensure that winners of the bids do not later struggle to meet the financial and other requirements.
“I don’t know how a former civil servant will be able to deal with such high investment needed in the hydrocarbon sector unless they have some financial backing from private equity firms or partners,” said a petroleum ministry official asking not to be identified.
If they get all the onshore blocks they bid for, ATNRL will have to find at least Rs 510 crore to make it operational. Even if they get 10 blocks, it means the investment figure will be in the range of Rs 300 crore. “We are not that big people; my son will have to find some way out for the investments required. I am even ready to mortgage my house for this,” added Venkataiah, who, before his retirement in 2014, was in charge of the public works department and has also served as the principal secretary to the Karnataka government. He had earlier held board positions in the board of Karnataka Road Development Corporation, public records showed.
In its memorandum, the company has suggested it could look for partners for investment and technological support.
Dilip Shanghvi of Sun Pharma through Sun Petrochemicals and Subhash Chandra’s Essel Group through Essel Group Middle East have also put in bids. The 46 contract areas on offer had an estimated reserves of 88 million tonnes of oil equivalent, which, if comes into production, can cut down India’s oil import bill by Rs 3,500 crore a year.
