Reliance’s ‘Gas Wars’, And The Book They Don’t Want You To Read

Posted on July 23, 2014 in Politics, Specials, Staff Picks

By Deepika Singhania:

Recently, India’s biggest private oil company Reliance Industries Limited (RIL) was fined USD 579 million (INR 3,500) by the newly formed NDA government for failing to meet the gas production target from its Krishna-Godavari D6 offshore field. This is the fourth consecutive fine that has been slapped on the company for falling short of production. The penalty amounts to a total of USD 2.37 billion (INR 14,200 crore) for four fiscal years, beginning April 1, 2010.

A file photo of Reliance Industries' KG-D6 control and raiser platform.
A file photo of Reliance Industries’ KG-D6 control and raiser platform.

According to the Union Oil Minister, Dharmendra Pradhan, the output from the gas fields in the Eastern offshore KG-D6 block was supposed to be 80 million standard cubic meters per day (mmscmd) but actual production failed to reach the target. In 2014, the output has only been 8.05 mmscmd so far. The fall in output means that utilities created at a huge investment went unutilised and created surplus inventories. The penalty will be in the form of disallowing RIL to recover their investment and operating costs. “GAIL and Chennai Petroleum (buyers of oil and gas produced at KG-D6 block) have been directed to remit the sale proceed of crude oil/condensate/natural gas from KG-DWN-98/3 (KG-D6) block which falls due immediately into the Government account so as to recover an amount of USD 115,263,612 at the rate of 50% by each company and deposit the same with the government,” Pradhan said.

RIL disputed the levied penalty and initiated arbitration against the government which is currently under process. RIL and its British and Canadian partners BP and Niko Resources say that unexpected geological complexities led to the output fall. It also said that the former UPA government promised to revise the gas prices (read ‘double’ the gas prices) on April 1, 2014 but it was unable to do so because the Election Commission did not allow that. They said that new government would decide on the matter.

So, where exactly does the problem lie and who is to be blamed? Our policies have been structured with loopholes to benefit corporations like RIL. They invest a large amount of money, fail to reach the production target and still get away with a loaded bank account. But more importantly, how can we allow firms like RIL to exploit the nation’s resources just to benefit a few? None of the policies have helped the citizens in any way. For the past few years, haven’t we all groaned every time the gas/petrol/diesel prices increased? Along with depletion of natural resources, they seem to be depleting the money in our wallets too!

RIL might be the top oil firm in the nation, but as it turns out, it also tops the list of the natural resources exploiters in the country. In Paranjoy Guha’s Thakurta’s Gas Wars – Crony Capitalism and the Ambanis, he focuses on how the battle between the Ambani brothers was all about controlling the natural resources in India. The book throws light on the Krishna-Godavari Basin gas reserve controversy which began when the older Ambani sibling refused to sell Anil oil at a previously agreed on price. It is well known that the UPA government backed RIL to help it make large profits. Like Guha says in the book, “In other words, what RIL was claiming was that it played strictly by the rules, It is, of course, a separate matter altogether that the rules themselves were tweaked to favour the company.” The many truths in the book were attempted to be silenced by RIL through directing the authors and everyone involved a legal notice. Not only that, majority of the media in the country seemed reluctant to cover the book’s launch in an effort to stay in RIL’s good books.

This book raises alarming questions not only about India’s largest corporate conglomerate, but also about the workings of the Indian government’s policies and the ruthless exploitation of resources and the citizens. Will the NDA government’s fine be a welcome change or is it just a pretentious course of action? After all, the Modi Sarkar was heavily backed by the Ambani brothers. But there have been no public favours from Modi to RIL so far. They’ve fined RIL rightly, yes. But it doesn’t look like the prices are going down anytime soon. So is it all doublespeak or will we finally witness a change and spend lesser on fuel in the near future? This, only time will tell.