The Telegraph
Wednesday , February 12 , 2014
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Arvind takes gas torch to Ambani
CM orders pricing case

New Delhi, Feb. 11: Chief minister Arvind Kejriwal today ordered that a case be filed against Mukesh Ambani, petroleum minister Veerappa Moily and his predecessor Murli Deora for allegedly colluding to inflate prices of natural gas drawn from the Krishna-Godavari Basin.

The Delhi government justified its locus standi in what is seen as a central subject by saying that most of the gas pricing “offences” were “committed” in Delhi.

Such a yardstick can bring almost all decisions of the Union government under the scrutiny of the state government — a precarious situation that leaves the Centre vulnerable to a challenge by a constitutional authority right at its doorstep.

Private citizens usually move the courts on such issues — a related petition is pending in the Supreme Court — as anti-corruption wings usually sit on individual complaints. But the intervention of the chief minister has injected an uncommon element.

The case has reached the Delhi government’s anti-corruption branch (ACB) that is manned by personnel from Delhi police and other central wings. Till late tonight, no FIR was registered. R.K. Pandey, the deputy commissioner of police at the ACB, declined to comment.

But N. Dilip Kumar, adviser to the chief minister, said provisions of the Prevention of Corruption Act would be invoked and sections dealing with fraud and conspiracy activated. If the conspiracy charge indeed is included, it will become a non-bailable charge that entails arrest.

The case is based on a complaint accusing Moily and Deora of being hand-in-glove with Ambani’s Reliance Industries Limited (RIL) to increase gas prices.

According to the complaint, RIL had signed a contract with National Thermal Power Corporation (NTPC) in 2004 to supply gas for its power plants at $2.34 per million British thermal unit (a traditional measure of energy) for 17 years. But in 2007, when Deora was minister, the price was hiked to $4.2. Now, in Moily’s regime, a formula effective from April 1 can take the price beyond $8.

Citing the complaint, Kejriwal said “Reliance partner Niko is still providing gas to Bangladesh at $2.34”. Niko, which is developing an Indian offshore field with Reliance, is providing Bangladesh gas from a block in that country.

The hike will cost India a minimum of Rs 54,500 crore every year, the complaint said, and enable RIL to make windfall profits of Rs 1.2 lakh crore.

Kejriwal said the proposed price would be “one of the highest in the world” and have a “destabilising impact” on the economy as “inflation will rise tremendously”.

Every household would be hit as transport fares would rise in tandem with the hike in CNG rates, so would prices of electricity generated from gas-based power plants, he added.

Although the Krishna-Godavari basin is miles away from the capital, Kejriwal said the alleged crime was well within the territorial jurisdiction of Delhi government’s ACB.

Kejriwal’s adviser Kumar said the ACB had been forced to take up the probe since the CBI apparently did not do anything. “The ACB and the CBI have concurrent powers. Since most of these offences, including decisions to finalise exorbitant hike in price of gas, have been committed in Delhi, the ACB is well within its rights to investigate it,” Kumar said.

The case comes at a time Kejriwal has been fighting a running battle with two Delhi power distributors owned by Anil Ambani, the brother of Mukesh, to cut tariff.

The distributors have pleaded their inability to do so, citing the prices of NTPC from which they source power. Kejriwal seems to be suggesting that the cost of power producers like NTPC will go up further if the new gas rates kick in and will have a cascading effect on consumers’ tariff.

The 100-page complaint to Kejriwal was filed jointly by former cabinet secretary T.S.R. Subramanian, former Navy chief Admiral R.H. Tahiliani, former expenditure secretary E.A.S Sarma and Supreme Court advocate Kamini Jaiswal. Former DG, Hydrocarbons, V.K. Sibal, and RIL will also be arraigned in the case.

A PIL by Subramanian and others seeking cancellation of the production-sharing contract between the Centre and Reliance Industries is pending in the Supreme Court.

Appealing to the Centre at a news conference to put the price hike on hold till the probe was over, Kejriwal said: “The complainants have attached a cost sheet of Reliance, which clearly shows that production cost of natural gas is less than $1.”

Quoting from the complaint, he accused RIL of creating artificial shortage and constantly blackmailing the government. He claimed only 18 per cent of the production target was being met.

According to the production report for the week June 10-16, 2013, only nine out of 18 wells were in production in the Krishna-Godavari D6 basin and remaining were closed.

The complaint also mentions that no attempt was made to determine the cost of production independently and accurately.

Minister Moily said the pricing was done in line with expert advice.

Shocking, says reliance

Reliance Industries issued the following statement on Tuesday evening:

The direction of the Delhi government to order the registration of an FIR in relation to the decision of Union cabinet to revise the price of gas is indeed shocking. The complaint and each of the allegations on the basis of which the Delhi government has taken such action are completely baseless and devoid of any merit or substance whatsoever. The allegations appear to have been made by persons who are also petitioners in the Supreme Court of India in a petition in which similar allegations have
been made.

The issue of gas pricing is also a contentious issue between the contracting parties being the Government of India and the contractors.

We deny these irresponsible allegations and propose to resort to the available legal remedies to protect our reputation and preserve the pioneering efforts
and investment made by Reliance so far. We also remain fully committed to the development of oil and gas sector in India within the parameters of law.

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