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Wednesday, 31 October 2012

Arvind Kejriwal targets Mukhesh Ambani, says crony capitalism ruining country

cleanmediatoday.com


Arvind Kejriwal targets Mukhesh Ambani, says crony capitalism ruining country
Clean Media Correspondent

New Delhi, Oct 31 (CMC) India Against Corruption on Wednesday brought Reliance Industries chairman Mukesh Ambani in its line of fire alleging that the UPA and the previous NDA governments had favoured his company by giving contract on gas exploration in KG Basin and concessions at a huge cost to the exchequer.
Calling it a "classic case of crony capitalism", activists Arvind Kejriwal and Prashant Bhushan alleged that Reliance was "blackmailing" the government to increase the price of gas by "almost stopping" the production and indulging in "hoarding like petty traders".

Attacking the decision to shift S Jaipal Reddy from petroleum ministry, they alleged it was now "absolutely crystal clear" that he was eased out of the crucial ministry only on account of "pressure" from Reliance Industries.

They said Reddy was "honest" and his "ouster" was only because he "actively resisted" Reliance' demand for an increase in the price of gas and wanted to penalise the company for "wilful reduction" of production of gas.

He asked why did Prime Minister Manmohan Singh not seek the opinion of the Attorney General when the then petroleum minister Manishankar Aiyar "refused to give in" to Reliance' demand for increasing the price of gas from $2.34 per unit to $4.2 per unit in 2006.

"In 2006, Aiyar was removed and Murli Deora was brought in and he cleared the files within one and half months. Why does he seek the opinion of Attorney General now? Why does his heart beats only for Reliance?" Kejriwal said.

New petroleum minister M Veerappa Moily refused to react to the allegations.

Kejriwal said it is always said that the Prime Minister is not involved in corruption but he comes under the purview of Prevention of Corruption Act for certain decisions taken by his government in various matters like 2G and coal block allocations.

The activists demanded that the KG Basin contract be cancelled and government should immediately put in place adequate systems to get full production from the same location at cheapest prices for the country.

"This was a sweet agreement which the BJP gave to Reliance on strange conditions which says that when the production cost increases, the profit also increases for the company," Kejriwal said.

"Mukesh Ambani is running the country it seems... Jaipal Reddy was removed as he refused to hike the charges being levied by Reliance Industries to supply gas to NTPC," Kejriwal said at a press conference.

He said the government looked helpless before the corporate group.

According to Kejriwal, the KG basin was awarded to Reliance in 2000 by the NDA government when the corporate agreed to supply gas to the National Thermal Power Corp for the next 17 years at $2.5 per unit.

But, said Kejriwal, the company revised the rate to $4.25 per unit in 2007 which then finance minister Pranab Mukherjee agreed to as the head of an empowered group of ministers.

Later, he said, the company wanted the rate to be further hiked to $14.25 per unit.

"The company was allowed to hike the cost of producing gas and thus its profits," said Kejriwal.

Reliance Industries was not immediately available for comment.

They also cited purported conversations between corporate lobbyist Niira Radia and AB Vajpayee's foster son-in-law Ranjan Bhattacharya to say that Ambani had claimed that Congress was under his control.

The conversation makes it clear that Ambani had powerful influence over the Congress and the BJP, he claimed.

"In the Nira Radia tapes, Ranjan Bhattacharya (former prime minister A B Vajpayee's son-in-law) is heard telling Niira that Mukesh Ambani told him 'Congress to ab apni dukaan hai."

"BJP signed a sweet deal with RIL in 2000. Congress faithfully implemented it."

A press release from IAC alleged Prime Minister Manmohan Singh had succumbed before corporate interests.

"The PM was very sympathetic to RIL. PM requested Ministry of Petroleum to seek AG's opinion on whether gas prices could be increased midway as demanded by Reliance. It is strange why did the PM not show similar concern when NTPC was forced to accept higher gas price from RIL? Why is the PM not pulling up Reliance for not producing 80 mmscmd gas as per their commitment? Why did the PM not seek legal opinion when country¡¦s interests were at stake? Why is PM showing so much interest when RIL interests are at stake?"

It also says: "This episode explains the real reasons for price rise in the country. The government seems to be succumbing to illegitimate demands of some powerful corporates in the country (like RIL in this case). Benefits provided to RIL in this case contributed to price rise in power and fertilizer sectors. Similarly, on one hand, government says that they do not have Rs. 35,000 crores to provide LPG subsidy to the people, on the other hand, the government bends backwards to provide benefits to these corporate."

The press conference also witnessed some drama when three youths shouted slogans against Kejriwal and tried to throw a shoe at him. The youths were overpowered by IAC supporters and handed over to police.

Just before this, another man raised questions about his wife, an IRS Officer, not getting a transfer out of Delhi for the past 20 years.

As there was commotion, Kejriwal asked his supporters to allow him to raise the question but media persons surrounded him, saying non-journalists were not allowed to raise questions.


India Against Corruption's main allegations:
* In 2006, Mani Shankar Iyer was removed and Murli Deora brought in to increase RIL capex from $ 2.39 billion to $ 8.8 billion and to increase gas price from $2.34  per mmBTU to $ 4.2 per mmBTU

* In 2012, Jaipal Reddy has been removed and Moily brought in to increase gas prices from $ 4.2 per mmBTU to $ 14.2 mmBTU and to condone RIL’s blackmailing of reducing gas production

* Both BJP and Congress involved. BJP signed a sweet deal with RIL in 2000. Congress faithfully implemented it

* If RIL demand of increasing the gas price to $ 14.2 is accepted, it would lead to shut down of several gas based power plants and increase in power and fertilizer prices

* By this deal, RIL would benefit by an additional Rs. 43,000 crore

* In Nira Radiia tapes, Ranjan Bhattacharya (Vajpayee’s son in law) is heard telling Nira that Mukesh Ambani told him –“Congress to ab apni dukaan hai”

* Huge benefits given to RIL in last one decade despite flagrant violations of various agreements by RIL. Benefits to RIL causing serious price rise in the country.

* "In order to pressurize the government, RIL substantially reduced its production of natural gas. Total consumption of natural gas in the country is 156 mmscmd. According to agreement, RIL was supposed to produce 80mmscmd (more than 50% of the total demand) from 2009."

* "RIL got this contract during NDA regime in the year 2000. The contract was meant to favor RIL right from the beginning. In any business, increase in costs means decrease in profits."

The IAC press release alleged that performance of RIL so far has been much worse than perhaps the worst performing government department.

1. 4 times cost escalation within 2 years from $ 2.39 billion in 2004 to $ 8.8 billion in 2006.
2. Increase in gas price from $ 2.34 per mmBTU in 2004 to $ 4.2 per mmBTU in 2007 to the present demand of $ 14.2 per mmBTU.
3. Capacity created for producing 80 mmscmd after incurring such a huge cost ends up producing just 27 mmscmd after 12 years.
4. 31 oil wells should have been in production till now. Out of them, just 13 are functional.

Kejriwal and lawyer Prashant Bhushan, a leading member of IAC, alleged the allocation of KG Basin to Reliance is on similar lines as coal block allocation scam. They alleged both Congress and BJP were in 'Ambani's pocket'.

1 comment:


  1. Arvind might be right but he is fighting a lost fight!

    ReplyDelete