CBI probe sought in GSPC-Geo Global's KG Basin deal

Last Updated: Fri, Apr 26, 2013 04:10 hrs

The Gujarat High Court on Thursday issued notices to state government and Gujarat State Petroleum Corporation (GSPC) Limited while hearing a public interest litigation (PIL) seeking CBI investigation into the PSU's joint venture with Canada-based Geo Global Resources Inc (GGR) for oil and gas exploration in KG Basin.

The PIL filed by one Nimishkumar Shah has alleged it its petition that the 'misadventure' of the GSPC with GGR has resulted in Rs  10,000 crore loss to public exchequer. Which include undue benefit to Adani Energy and other companies, he further claimed.

A division bench of Chief Justice Bhaskar Bhattacharya and Justice J B Pardiwala while issuing notices to Gujarat government and GSPC has also issued notice to Central government and directed all parties to file their respective replies to the allegation made in the PIL with in two weeks. Further hearing in the case has been kept in June after the High Court's summer vacation.

GSPC holds 80 per cent  interests in Deendayal Block while Jubilant Enpro and GeoGlobal Resources hold 10 per cent each. The consortium partners committed $59.23 million for the first exploration phase and $32.12 million and $18.35 million for the subsequent phases amounting to a total of $109.7 million.

The differences between GSPC and GeoGlobal cropped up in September 2005 when the state venture asked the Canadian partner to contribute towards exploration costs on account of 'significant cost overruns'. Subsequently, GSPC severed its efforts while it continued to pursue exploration interests in DeenDayal Block, seeking $150 million from GeoGlobal.

GSPC blamed the technical partner GeoGlobal for the incorrect advisory, asking the JV partner in KG Basin to surrender its 10% stake.

The DeenDayal Block of KG Basin has certified reserves of 2 TCF of gas. The partners have been at loggerheads since 2005 over the commercial terms and payments of over $150 million. There has been no amicable resolution to the dispute.

The PIL filed in Gujarat High Court on Thursday cited the case of the alleged coal block allocation scam which came to light in March last year.

It said that just like investigation of the said scam was handed over to  Central Bureau of Investigation (CBI) and FIR came to be lodged against the beneficiaries and the decision making authorities, in the case of GSPC also the probe should be handed over to the central agency.

It also sought penal actions against the beneficiaries and the decision making authorities related with the GSPC case since serious issue regarding loss of public exchequer to tune of Rs . 10,000 crores is involved in the matter.

PIL has cited the Comptroller and Auditor General of India (CAG) report for action against GSPC and said that though exploration, development and production activities are of high risk and capital intensive nature and requires long gestation period, the Company largely utilised (2006-11) short term loans (constituting 38 per cent of the total borrowings) on these activities.

"It is pertinent to note that the dependence on short term loans for these activities was not a prudent financial practice," the petition added.

More from Sify: