Rage And Reason In The Burning Politics Of Oil

Pradeep Puri examines the veracity of the various charges levelled by the CPI leader by talking to a number of former and serving high-level officials of the petroleum ministry who do not wish to be identified for fear of entering into controversy with their political bosses.

Point: Funds meant for the development of oil resources have been silently diverted to general Budget.

Counterpoint: As per the Oil Industry (Development) Act, the cess of Rs 900 on every tonne of crude oil produced within the country and meant for the development of oil industry, including exploration activities, is credited to the Consolidated Fund of India. Under the Constitution, only Parliament is empowered to appropriate funds from the consolidated fund for oil development or any other purpose, including use in the general Budget. Therefore, there is no question of the funds being silently diverted to the general Budget.

 

Point: Highly-placed officials keen to secure plum jobs abroad after retirement could be involved in diversion of these funds.

Counterpoint: Not many top officials have taken up jobs with multinationals after their retirement. The only two exceptions are K K Kapoor, former chairman of the Gas Authority of India Limited (GAIL), and R K Narang, former chairman of Indian Oil Corporation. While Kapoor joined Enron, Narang went to Texco. Even in these cases, Enron have not done any work with GAIL so far where Kapoor could have helped it. Texaco, on the other hand, still has not got any job in India.

Point: Though Rs 28,900 crore has been raised from the cess, only Rs 902 crore has been given to the Oil Industry Development Board (OIDB). After 1991-92, not a single rupee of this cess has been given to the oil sector.

Counterpoint: True. But no worthwhile scheme has been proposed to the government which required OIDB loan. The Planning Commission has also been insisting that the physical targets of the oil companies will not be allowed to suffer for want of funds. In fact, the commission has been critical of the poor financial absorption capacity of the oil companies and has been critical of these companies not meeting their reserve accretion targets during the Eighth Plan.

Point: Funds have been diverted to keep India permanently dependent on oil imports.

Counterpoint: Not true. The government has already launched an accelerated oil exploration programme to find more oil. Deep sea exploration is also being undertaken at a heavy cost. Moreover, dependence on imported oil does not imply losing ones sovereignty. The United States imports more than 60 per cent of its oil requirements. Japan does not have any oil and imports 100 per cent of its oil needs.