Reliance Industries, the country’s largest listed company, and its chairman Mukesh Ambani came under the attack of India Against Corruption (IAC) activists Arvind Kejriwal and Prashant Bhushan today for allegedly “threatening the democratic structure of the country” by influencing appointment of ministers at will. Even the prime minister is powerless in front of the explorer’s might, the activists said in a crowded press conference at the Constitution Club here.
Kejriwal, who started the proceedings in Hindi, alleged that Jaipal Reddy, who was the Union minister for Petroleum and Natural Gas till last week, was removed because he opposed a Reliance proposal to rise the price of the gas by over three times to $14.2 per mmBTU (million metric British thermal unit).
People should prevent this Government from granting a $14.25 per unit price to RIL by sending RTI applications to the new Petroleium Minister Veerappa Moily, the activist said.
“RIL has the contract to extract oil from KG (Krishna-Godavari) basin. Under an agreement of 2009 with the government, they are supposed to sell gas at $4.2 per mmBTU up to 31st March 2014. Midway now, RIL is demanding that the price be increased to $14.2 per mmBTU. Jaipal Reddy resisted that and he was thrown out,” Kejriwal said.
They added that Reddy was not the first to lose his job for taking on Reliance citing the instance of Murli Deora replacing Mani Shankar Aiyer in 2006. Aiyer, according to them, had resisted a RIL move to increase capital expenditure in the basin, which the activists said, reduced the government’s profits and enriched Reliance’s coffers.
Bhushan called for cancellation of all contracts awarded to Reliance be cancelled. “Consequences otherwise are horrendous. These crony capitalists are threat to our democracy itself,” he said.
According to IAC, if the hike in gas prices was allowed, it would result in a substantial increase in the cost of power for end consumers. “Today, power from gas based power plant costs around Rs 3 per KWH (kilowatt hour). If gas price is increased as demanded by Reliance power prices would go up to Rs 7 per KWH,” the activists said in a statement. Such escalation in prices could make most of these gas based plant unviable and would have to be shut down, the statement added.
Another key allegation was “goldplating” of capital expenditure of which the comptroller and auditor general said that there is strong evidence. The Initial Development Plan submitted by RIL in 2004 said it would produce 40 mmscmd for an investment of $ 2.39 billion. In two years RIL submitted another plan saying it would produce double gas for an investment of $ 8.8 billion. “Doesn’t that sound strange? To double production, you increase your investment by four times? Having put the initial infrastructure in place, it should have cost lesser to create additional production capacity.’’ Kejriwal asked.
In response, Reliance Industries said, “The statements made by IAC in the press conference today are devoid of any truth or substance whatsoever and are denied.”
The statement added that the deep water exploration project in the KG-D6 basin “has deployed the best technical resources and has been recognized by the oil and gas industry as one of the very best in its class. This project has added great economic value to the country and by all accounts is a project of which India can be justly proud.”
On the specific allegations by the activists, Reliance said “Irresponsible allegations made by IAC at the behest of vested interests without basic understanding of the complexities of a project of this nature do not merit a response.”
RIL was not only supposed to give gas at $ 2.25 per unit for 17 years to the country, it was also supposed to extract at 50 per cent of the total natural gas requirement of the country annually. Going by this calculation, RIL was to extract eight crore units annually. However, RIL is producing just two crore units now, Kejriwal said. They were hoarding gas the way petty grocers hoard rice and wheat, Kejriwal alleged.
The activists said BJP also had to take a part of the blame as the original contract, which benefitted the company rather than the country was signed in 2000 under the NDA government. The deal was later nurtured by the Congress led UPA Governments, the activists said.
The press conference had some uninvited guests too, who tried to disrupt the proceedings. An unidentified stockily built man in a blue shirt started asking Kejriwal why he and his did not get transfers out of Delhi during their service. While Kejriwal offered to respond, a scuffle ensued between IAC supporters and a few people who shouted slogans against Kejriwal. The conference continued when Kejriwal dismissed it as “this is the least you can expect, when you take on the corrupt and powerful.”
