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Kejriwal now attacks RIL, says it made undue gains

Source : BUSINESS_STANDARD
Last Updated: Wed, Oct 31, 2012 19:51 hrs

Reliance Industries (RIL), the country’s largest listed company, and its chairman Mukesh Ambani came under attack from India Against Corruption (IAC) activists Arvind Kejriwal and Prashant Bhushan on Wednesday for allegedly “threatening the democratic structure of the country” by influencing the appointment of ministers at will.

Even the prime minister was powerless in front of the explorer’s might, the activists said at a crowded press conference at the Constitution Club here. Kejriwal, who started proceedings in Hindi, alleged that Jaipal Reddy, Union minister for petroleum and natural gas till last week, was removed because he opposed an RIL proposal to raise the price of gas by over three times to $14.2 per mBtu (million British thermal units).

People should prevent the government from granting a $14.2 per unit price to RIL by sending RTI applications to the new minister, M Veerappa Moily, the activist said.

“RIL has the contract to extract oil from the KG (Krishna-Godavari) basin. Under an agreement of 2009 with the government, they are supposed to sell gas at $4.2 per mBtu up to March 31, 2014. Midway now, RIL is demanding the price be increased to $14.2 per mBtu. Jaipal Reddy resisted that and he was thrown out,” Kejriwal said. He added Reddy was not the first to lose his job for taking on Reliance, citing the instance of Murli Deora having replaced Mani Shankar Aiyar in 2006. Aiyar, according to the activists, had resisted an RIL move to increase capital expenditure in the basin, which they said, reduced the government’s profits and enriched the company’s coffers.

Bhushan called for cancellation of all contracts awarded to RIL. “Consequences, otherwise, are horrendous. These crony capitalists are a threat to our democracy,” he said.

According to the IAC, if the rise 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 plants costs around Rs 3 per Kwh (kilowatt hour). If the 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 those gas-based plants unviable and they would have to be shut, the statement added.

Another key allegation was “goldplating” of capital expenditure, of which the Comptroller and Auditor General had said there was strong evidence. The initial development plan submitted by RIL in 2004 said it would produce 40 mscmd for an investment of $2.39 billion. In two years, RIL submitted another plan, saying it would produce double the 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 less to create additional production capacity,’’ Kejriwal said.

The activists said the BJP had to take part of the blame as the original contract, which benefited the company, was signed in 2000 under the BJP-led NDA government.

The press conference had some uninvited guests, too, who tried to disrupt proceedings. Kejriwal dismissed it, saying, “This is the least you can expect when you take on the corrupt and powerful.”

RIL’s response
The statements made by IAC in the press conference today are devoid of any truth or substance whatsoever and are denied.

The deepwater exploration project in the KG-D6 basin has deployed the best technical resources and has been recognised 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.

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.



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