In a move calculated to roil political waters, Delhi chief minister Arvind Kejriwal on Tuesday ordered the state Anti-Corruption Branch (ACB) to file a case against Union petroleum minister M Veerappa Moily, former minister Murli Deora, Reliance Industries (RIL) chairman Mukesh Ambani and former director general hydrocarbons V K Sibal.
Alleging overpricing of natural gas and underproduction from RIL's KG-D6 field, Kejriwal said a first information report (FIR) would be lodged following a complaint received from four individuals. Those he has named questioned the locus standi of the Delhi government to file FIRs against ministers.
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“After receiving a complaint, we have directed the Anti-Corruption Branch to file an FIR of criminal case against them today,” Kejriwal said, while alleging that the government had collaborated to gift windfall gains to RIL.
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Further, the company said the allegations appeared to have been made by persons who were also petitioners in the Supreme Court in a petition in which similar allegations had been made. The issue of gas pricing was also a contentious issue between the contracting parties – the government and the contractors. The company said it denied the “irresponsible allegations” and proposed to take legal remedies to protect its reputation and preserve the investments made.
The complaint was moved by former cabinet secretary T S R Subramanian, former power secretary E A S Sarma, former navy chief Admiral R H Tahiliani and Supreme Court lawyer Kamini Jaiswal.
Uneasy at appearing to endorse Kejriwal and the Delhi government as the sole force fighting corruption, the opposition Bharatiya Janata Party (BJP) attempted to be dismissive of Kejriwal’s charges. BJP leader V K Malhotra wondered about the legal jurisdiction the Delhi government had in filing cases and advised Kejriwal to fight legally. Malhotra said writing letters was not enough.
Moily said Kejriwal was saying all that because of his lack of familiarity with government procedures. “He (Kejriwal) should know there should be a certain system for fixing the pricing and nothing is done without expert advice,” Moily said. When contacted, Deora refused to comment on the issue.
Kejriwal questioned the government’s decision to raise the price of gas produced by RIL from the KG-D6 block. The Union Cabinet raised the gas price from $4.2 per British thermal unit (mBtu) to about $8 per mBtu last year for RIL fields also in December, which will come into effect from April 2014. This is in return for a bank guarantee that RIL has to submit until an ongoing arbitration process regarding the holding of gas in D1 and D3 fields is concluded.
The complaint alleges that RIL can produce gas at lower than $1 per unit and would get benefits amounting to Rs 54,000 crore per annum from the hike. Interestingly, a case is going on in the Supreme Court based on a public-interest litigation (PIL) filed by CPI leader Gurudas Dasgupta and E A S Sarma.
Kejriwal said that as a result of the rise, effective from April 1, transport tariff and costs of electricity and fertilisers would increase. The Delhi government said RIL's partner Niko was still supplying gas to Bangladesh at $2.34 per unit.
Kejriwal said he would write to Prime Minister Manmohan Singh and Moily on Wednesday, asking them to suspend their order for a hike till the duration of the inquiry.
“I also seek cooperation of all the ministers and ask them in the letter that if Reliance can’t produce gas, which leads to artificial scarcity, then the blocks should be given to players like ONGC,” the Delhi CM said.
The complaint alleged that there was an international bid floated by NTPC in response to which the company had offered to supply gas at $2.34 per mBtu.
“The government deliberately ignored this and fixed the price in 2009 at $4.2 per unit, higher than the international competitive price. In a way, this decision had the effect of weakening the case of NTPC which approached the court for enforcing supply at $2.34. Reliance derived a huge undue benefit from this,” Sarma said.
Interestingly, a petroleum ministry official said, “The ACB has no mandate to file an FIR against a Union Cabinet minister. Moreover, the allegation being made related to the $4.2 pricing was clarified by the Supreme Court itself in the RIL-RNRL case, stating that the Centre has the right to fix prices.”
According to Sarma, he approached the Prime Minister several times against the move but the Centre went ahead regardless and increased the price further to $8.4.
The gas price hike decision was taken on June 27, 2013, by the Cabinet Committee on Economic Affairs.
The price is based on a formula suggested by the Rangarajan committee, taking an average of the US, Europe and Japanese hub and then averaging it out with the netback price of imported liquefied natural gas (LNG).
“While allegations are being raised, one has to see that the major gainers of a price rise would be public sector undertakings such as ONGC. Moreover, domestic production needs a boost, because in 2012-13 the forex outgo because of LNG imports touched $ 7 billion (Rs 45,000 crore). The price of $8 comes at a time when LNG is imported at $12-18,” an industry source said.