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Corruption crusaders, Jio!
A book ''Gas wars: Crony capitalism and the Ambanis'' authored by Paranjoy Guha Thakurta with Subir Ghosh and Jyotirmoy Chaudhuri was published on March 27, 2014.
Corruption crusaders, Jio!
A book ''Gas wars: Crony capitalism and the Ambanis'' authored by Paranjoy Guha Thakurta with Subir Ghosh and Jyotirmoy Chaudhuri was published on March 27 2014. The book reveals how the simmering controversy over the rich natural gas reserves in the Krishna-Godavari (KG) Basin boiled over into a primetime storm on gas pricing involving the office of the CAG, the Ministry of Petroleum and Natural Gas as well as the PMO. Even as it introduces new dimensions to it, Gas Wars (GW) argues that the battle between the Ambani brothers was largely about wresting control over reserves of natural gas that are below the ocean bed along the basin of the two greatest rivers of southern India.
GW highlights cases of crony capitalism that allowed the Reliance group to blatantly exploit loopholes, consciously retained in the system to benefit it. Even when laws and policies appeared fair, rational, and reasonable, the way in which these rules and procedures were framed and implemented by bureaucrats acting at the behest of their political masters exposed the deep nexus between business and politics in India. Reliance group has benefited from the way government policies are structured, it lays bare the alarming facts of a natural disaster waiting to happen due to the ruthless exploitation of the country's natural resources in order to swell the fortunes of a few. 
Striking fear and chilling effect
A day after the book was launched in New Delhi on April 15, 2014, lawyers for RIL and Mukesh Ambani served the first notice on Thakurta, his co-authors, publishing facilitator Authors UpFront, distributor FEEL Books, printer and Internet retailers Amazon, Flipkart and Kobo. The notice, alleging defamation, called for a stop on the sale, publication and distribution of the book, suggested that all existing copies be destroyed, that online publicity be stopped, and an unconditional apology tendered.
A week later, the author and co-authors received a second legal notice, this time from lawyers representing Anil Ambani and the conglomerate ADAG. This notice asked for the removal of the website promoting the book, besides an immediate halt to the sale, publication, distribution and circulation of the book. On April 23, all nine respondents of the first notice from Khaitan & Co. received another round of notices, expressing unhappiness at the proceedings of the launch event.
 
The April 23 notice had a rather prickly dart thrown at all the respondents. They were asked to pay "token damages of INR 100 crore" within ten days. A similar notice was served on the editor of MoneyLife magazine and website for publishing a review of Gas Wars. In legal jargon, such notices are called SLAPP or strategic lawsuits against public participation – that is, litigation meant to harass, intimidate and silence critical writers who are expected to give in after they are faced with prospects of incurring high expenditure on legal defence. On May 23, 2014, a month after the respondents responded to the legal notices, a fourth notice was received by them from Khaitan & Co. reiterating the views that had been already made.
 
What happened to the legal action against Gas Wars that took on the Ambanis? Over the past two yeras, Thakurta has often been asked: "What happened to the case against you?" His standard reaction: "Case? What case?" Khaitan & Co., representing Mukesh Ambani and RIL and Mulla & Mulla, Craigie, Blunt & Caroe, representing Anil Ambani and the ADAG, have not filed any legal proceedings against the respondents, in any court of law in India or anywhere else, since the legal notices were served on them in April-May 2014. In spite of the bullying tactics by the Ambanis many people including Arvind Kejriwal, Prashant Bhushan and Gurudas Dasgupt (CPI-MP) kept raising this issue. The AP Shah committee's report submitted a day before the Jio launch exposes why there was no legal proceedings against the accusers. 
Shah panel indicts RIL in KG basin case
The justice A.P. Shah committee that probed a dispute between state-run ONGC and RIL has indicted the latter for "unfair enrichment" in a report submitted to the government on Aug 31. The dispute pertained to the flow of gas between the adjacent fields of ONGC and RIL in the KG basin. The unfair enrichment stemmed from RIL retaining the gains of the gas which flowed into its KG D6 field from adjacent fields of ONGC.
The report accused both ONGC and RIL of not bringing to the notice of the regulator, the Director General of Hydrocarbons, information they had about how their fields were connected. ONGC took action six years after it came to know about gas from its field flowing into RIL's field, the panel said. 
Panel's findings: A contractor is limited by the gas that is available in its clearly defined and demarcated contract area. Between 1 April 2009 and 31 March 2015, about 11 billion cubic metres (bcm) of gas migrated to KG D6 from adjacent fields, of which 8.9 bcm was appropriated by RIL. RIL took gas worth Rs 11,000 crore (and counting) from ONGC's wells. RIL has to return the gains it has unfairly made to the government, which is the owner of natural resources. 
In a suggestion that could lead to questions over the role of ONGC executives in the past, the panel said the firm's role must be scrutinized to determine why it had remained inactive for such a long period without developing its gas field. 
The excitement over Sep 1 Reliance Jio launch may sooner or later fade away, but Justice Shah Committee's indictment of RIL will ensure that the company remains in a spot. The Shah Committee's report is one that RIL did not want the public to see as per the panel's proceedings. This comes a month after the CAG pegged "excess cost recovery" from the KG-D6 gas block operated by RIL in the Krishna-Godavari basin at $1,547.85 million or Rs 9307.22 crore.
Why the Shaw panel?
ONGC raised a dispute over extraction of natural gas that made news in July 2013. ONGC wrote to the director-general of hydrocarbons seeking data on an adjoining block that was under RIL. Just before the April 2014 Lok Sabha elections, the three parties to the dispute – ONGC, RIL and the director-general – agreed to hire an independent consultant to sort out claims and counter-claims regarding interconnectivity of the reservoirs from which they were extracting natural gas.
The international consultant agreed upon by all three parties was the US-based DeGolyer & MacNaughton (D&M), who filed an interim report in October 2015, and the final report in December that year. The report said that reservoirs in ONGC's KG basin KG-D5 and the Godavari Producing Mining Lease were indeed connected with KG-D6 block of RIL.
It said 11.122 billion cubic metres of ONGC gas had migrated from Godavari-PML and KG-D5 to RIL's KG-D6. At a price of $4.2 per million British thermal unit, the volume of gas belonging to ONGC that RIL produced was worth $1.7 billion or Rs 11,055 crore.
Delay tactics
D&M's report should have been accepted and acted up on by the govt. But two weeks after the above report was submitted, the minister for state for petroleum and natural gas Dharmendra Pradhan appointed Justice AP Shah to examine the report's findings and recommend action to be taken by the government. A sure shot delay tactics. 
The Shah Committee noted that the D&M report itself had been commissioned under terms agreed upon by all stakeholders in the dispute, especially RIL and ONGC and remarked: "The D&M report itself appears to be reasonable in its research, methodology and conclusions drawn, and is hard to be faulted. In the circumstances, and with the information available at hand, it is difficult for the committee to believe that the manner in which the D&M report was arrived at was questionable."
That's not all. Since the D&M report looked at migration of gas till March 2015, the Shah Committee has recommended that the government should look into migration thereafter as well. It has also criticised the ONGC which too had some prior knowledge about the issue but did not take any action for six years.
The implications of the committee's findings and observations are worse – as they will affect the financials of RIL. The CAG had remarked only a month back that in case the ministry accepted the conclusion that RIL did indeed draw gas from ONGC's contiguous fields, and directs RIL to compensate ONGC for the same, it may affect the financials of KG-D6 since April 2009 when production of gas commenced from the block.
Does the mischief of RIL end only with the realisation of the misappropriated amount? What about the criminal liablity? Pradhan has sought another breather – a month in which to act on the Shah panel's report. 
Policy corruption
Dr Amit Bhaduri, Professor Emeritus-JNU in a seminar at XIMB on Sep 1 observed that the policy corruption of the state is much more dangerous than the ministerial, bureaucratic and corporate corruptions. That was the problem with the Manmohan Singh govt all along. The kid glove treatment given to RIL, Adani, Essar, ADAG, Sterlite, Jindal, Hindalco, ITC, L&T, mining companies, Westinghouse etc by the Modi govt clearly vindicates Dr Bhaduri's concern about policy corruption.  
Reference:
1) ''What happened to the legal action against 'Gas Wars', the book that took on the Ambanis?'' by Paranjoy Guha Thakurta in Scroll.in, May 07, 2015. 
2) ''Shah panel indicts RIL in KG basin case'' by Gireesh Chandra Prasad in Livement, Sep 1, 2016
3) ''Lost in the Jio din: Gas worth Rs 11,000 crore (and counting) that RIL took from ONGC's wells'' by Subir Ghosh in Scroll.in, Sep 3, 2016. The book reveals how the simmering controversy over the rich natural gas reserves in the Krishna-Godavari (KG) Basin boiled over into a primetime storm on gas pricing involving the office of the CAG, the Ministry of Petroleum and Natural Gas as well as the PMO.

Even as it introduces new dimensions to it, Gas Wars (GW) argues that the battle between the Ambani brothers was largely about wresting control over reserves of natural gas that are below the ocean bed along the basin of the two greatest rivers of southern India.

GW highlights cases of crony capitalism that allowed the Reliance group to blatantly exploit loopholes, consciously retained in the system to benefit it. Even when laws and policies appeared fair, rational, and reasonable, the way in which these rules and procedures were framed and implemented by bureaucrats acting at the behest of their political masters exposed the deep nexus between business and politics in India. Reliance group has benefited from the way government policies are structured, it lays bare the alarming facts of a natural disaster waiting to happen due to the ruthless exploitation of the country's natural resources in order to swell the fortunes of a few.

Striking fear and chilling effect

A day after the book was launched in New Delhi on April 15, 2014, lawyers for RIL and Mukesh Ambani served the first notice on Thakurta, his co-authors, publishing facilitator Authors UpFront, distributor FEEL Books, printer and Internet retailers Amazon, Flipkart and Kobo. The notice, alleging defamation, called for a stop on the sale, publication and distribution of the book, suggested that all existing copies be destroyed, that online publicity be stopped, and an unconditional apology tendered.

A week later, the author and co-authors received a second legal notice, this time from lawyers representing Anil Ambani and the conglomerate ADAG. This notice asked for the removal of the website promoting the book, besides an immediate halt to the sale, publication, distribution and circulation of the book. On April 23, all nine respondents of the first notice from Khaitan & Co received another round of notices, expressing unhappiness at the proceedings of the launch event.

The April 23 notice had a rather prickly dart thrown at all the respondents. They were asked to pay "token damages of INR 100 crore" within ten days. A similar notice was served on the editor of MoneyLife magazine and website for publishing a review of Gas Wars. In legal jargon, such notices are called SLAPP or strategic lawsuits against public participation – that is, litigation meant to harass, intimidate and silence critical writers who are expected to give in after they are faced with prospects of incurring high expenditure on legal defence. On May 23, 2014, a month after the respondents responded to the legal notices, a fourth notice was received by them from Khaitan & Co reiterating the views that had been already made.

What happened to the legal action against Gas Wars that took on the Ambanis? Over the past two years, Thakurta has often been asked: "What happened to the case against you?" His standard reaction: "Case? What case?" Khaitan & Co, representing Mukesh Ambani and RIL and Mulla & Mulla, Craigie, Blunt & Caroe, representing Anil Ambani and the ADAG, have not filed any legal proceedings against the respondents, in any court of law in India or anywhere else, since the legal notices were served on them in April-May 2014. In spite of the bullying tactics by the Ambanis many people including Arvind Kejriwal, Prashant Bhushan and Gurudas Dasgupta (CPI-MP) kept raising this issue. The AP Shah committee's report submitted a day before the Jio launch exposes why there was no legal proceedings against the accusers.

Shah panel indicts RIL in KG basin case

The justice AP Shah committee that probed a dispute between state-run ONGC and RIL has indicted the latter for "unfair enrichment" in a report submitted to the government on August 31. The dispute pertained to the flow of gas between the adjacent fields of ONGC and RIL in the KG basin. The unfair enrichment stemmed from RIL retaining the gains of the gas which flowed into its KG D6 field from adjacent fields of ONGC.

The report accused both ONGC and RIL of not bringing to the notice of the regulator, the Director General of Hydrocarbons, information they had about how their fields were connected. ONGC took action six years after it came to know about gas from its field flowing into RIL's field, the panel said.

Panel's findings: A contractor is limited by the gas that is available in its clearly defined and demarcated contract area. Between April 1, 2009 and March 31, 2015, about 11 billion cubic metres (bcm) of gas migrated to KG D6 from adjacent fields, of which 8.9 bcm was appropriated by RIL. RIL took gas worth Rs 11,000 crore (and counting) from ONGC's wells. RIL has to return the gains it has unfairly made to the government, which is the owner of natural resources.

In a suggestion that could lead to questions over the role of ONGC executives in the past, the panel said the firm's role must be scrutinized to determine why it had remained inactive for such a long period without developing its gas field.

The excitement over September 1 Reliance Jio launch may sooner or later fade away, but Justice Shah Committee's indictment of RIL will ensure that the company remains in a spot. The Shah Committee's report is one that RIL did not want the public to see as per the panel's proceedings. This comes a month after the CAG pegged "excess cost recovery" from the KG-D6 gas block operated by RIL in the Krishna-Godavari basin at $1,547.85 million or Rs 9307.22 crore.

Why the Shaw panel?

ONGC raised a dispute over extraction of natural gas that made news in July 2013. ONGC wrote to the director-general of hydrocarbons seeking data on an adjoining block that was under RIL. Just before the April 2014 Lok Sabha elections, the three parties to the dispute – ONGC, RIL and the director-general – agreed to hire an independent consultant to sort out claims and counter-claims regarding interconnectivity of the reservoirs from which they were extracting natural gas.

The international consultant agreed upon by all three parties was the US-based DeGolyer & MacNaughton (D&M), who filed an interim report in October 2015, and the final report in December that year. The report said that reservoirs in ONGC's KG basin KG-D5 and the Godavari Producing Mining Lease were indeed connected with KG-D6 block of RIL.

It said 11.122 billion cubic metres of ONGC gas had migrated from Godavari-PML and KG-D5 to RIL's KG-D6. At a price of $4.2 per million British thermal unit, the volume of gas belonging to ONGC that RIL produced was worth $1.7 billion or Rs 11,055 crore.

Delay tactics

D&M's report should have been accepted and acted up on by the government. But two weeks after the above report was submitted, the minister for state for petroleum and natural gas Dharmendra Pradhan appointed Justice AP Shah to examine the report's findings and recommend action to be taken by the government. A sure shot delay tactics.

The Shah Committee noted that the D&M report itself had been commissioned under terms agreed upon by all stakeholders in the dispute, especially RIL and ONGC and remarked: "The D&M report itself appears to be reasonable in its research, methodology and conclusions drawn, and is hard to be faulted. In the circumstances, and with the information available at hand, it is difficult for the committee to believe that the manner in which the D&M report was arrived at was questionable."

That's not all. Since the D&M report looked at migration of gas till March 2015, the Shah Committee has recommended that the government should look into migration thereafter as well. It has also criticised the ONGC which too had some prior knowledge about the issue but did not take any action for six years.

The implications of the committee's findings and observations are worse – as they will affect the financials of RIL. The CAG had remarked only a month back that in case the ministry accepted the conclusion that RIL did indeed draw gas from ONGC's contiguous fields, and directs RIL to compensate ONGC for the same, it may affect the financials of KG-D6 since April 2009 when production of gas commenced from the block.

Does the mischief of RIL end only with the realisation of the misappropriated amount? What about the criminal liability? Pradhan has sought another breather – a month in which to act on the Shah panel's report.

Policy corruption

Dr Amit Bhaduri, Professor Emeritus-JNU in a seminar at XIMB on September 1 observed that the policy corruption of the state is much more dangerous than the ministerial, bureaucratic and corporate corruptions. That was the problem with the Manmohan Singh government all along. The kid glove treatment given to RIL, Adani, Essar, ADAG, Sterlite, Jindal, Hindalco, ITC, L&T, mining companies, Westinghouse etc by the Modi government clearly vindicates Dr Bhaduri's concern about policy corruption.

References:

1) ''What happened to the legal action against 'Gas Wars', the book that took on the Ambanis?'' by Paranjoy Guha Thakurta in Scroll.in, May 7, 2015.

2) ''Shah panel indicts RIL in KG basin case'' by Gireesh Chandra Prasad in Livement, September 1, 2016.

3) ''Lost in the Jio din: Gas worth Rs 11,000 crore (and counting) that RIL took from ONGC's wells'' by Subir Ghosh in Scroll.in, September 3, 2016.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of merinews.com. In case you have a opposing view, please click here to share the same in the comments section.
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