Mukesh Ambani runs govt, not PM: Activists

RIL chief got Jaipal ousted from Petro Min, they allege

Anti-graft activists Arvind Kejriwal and Prashant Bhushan on Wednesday alleged a nexus between Reliance Industries Limited (RIL) and the current UPA and the predecessor NDA governments.

Addressing the media, they alleged petrochemical major’s chairman Mukesh Ambani “is actually running the government.”

India Against Corruption (IAC) leaders alleged that RIL was responsible for removing both S Jaipal Reddy and, much earlier, Mani Shankar Aiyar as petroleum and natural gas ministers. They claimed RIL’s oil extraction contract in the Krishna-Godavari basin had loopholes and the company was exploiting them to gain undue benefits. They also alleged a nexus between the corporate house and politicians cutting across political parties.

RIL, however, has denied charges calling them “irresponsible.” To emphasise their charge of the corporate-politicians nexus and how much power Reliance wields, the anti-graft activists played clippings from the infamous Niira Radia tapes.

In the tapes, Ranjan Bhattacharya (A B Vajpayee’s foster son-in law) is heard saying that Mukesh Ambani had told him, “Congress to ab apni dukaan hai” (Congress is in my pocket). The activists traced the story of the KG basin contract to 2002 when the NDA government was in power. They alleged that the contract was flawed as it was not based on the cost of the extraction and based on the investment. Reliance could increase profit by increasing the cost, which is against normal business practices.

They narrated how, after getting contract, Reliance started “blackmailing” the government. “RIL was to supply eight crore units of gas. In 2004, RlL said that ‘we will give gas’ for 17 years at $2.2 per unit to NTPC. But in 2007, they wanted to supply the gas at $4.2,” Kejriwal said.  “A responsible government should have taken them to court or cancelled their contract. But an EGOM under Pranab Mukherjee, now President, agreed to their terms,” they said.

“Under the agreement of 2009 with the government, they (RIL) are supposed to sell gas at $4.2 per unit up to March 31, 2014. Midway now, RIL is demanding that the price be increased to $14.2 per unit. Jaipal Reddy resisted that and he was thrown out,” said Kejriwal. 

“Jaipal Reddy had prepared a note for EGOM, in which he mentioned that accepting RIL’s demand would mean an additional profit of Rs 43,000 crore to RIL (in two years) at current levels of low production. Most of this gas is used in fertilizer and power production. Increasing gas price would mean an additional financial burden of Rs 53,000 crore to the Central and State governments. This would in turn mean higher electricity and fertilizer prices in the country or a higher subsidy burden,” he said. 

“If this price is accepted, people will have to pay Rs 7 per unit of electricity. In order to pressure the government, RIL substantially reduced its production of natural gas.
According to the agreement, RIL was supposed to produce more than 50 per cent of the total demand in the country from 2009. However, they are producing almost a third of their commitment. Production has been kept low to blackmail the government,” he alleged.

“They are not just hoarding the gas, but also forcing various consumers to buy gas from abroad. The gas imported from abroad costs around $13 per unit,” he said.  “Drastic reduction in production has forced many gas-based power plants in the country to shut down or run at much lower capacity. According to media reports, almost 9,000 MW of gas-based power plants are lying idle,” he said.

The activists also demanded a probe into the cost of gas production. They said the cost of production of gas is much less than $2.34.  “In 2006, Mani Shankar Iyer was removed and Murli Deora brought in to allow RIL to increase gas price from $2.34 per unit to $ 4.2 per unit,” allege the activists.

“In 2012, Jaipal Reddy was removed and Moily was brought in to increase gas prices from $ 4.2 per unit to $ 14.2 unit and to condone RIL’s blackmailing of reducing gas production,” they alleged.