On March 19, 2003, Reliance Gas Transportation Infrastructure Ltd (RGTIL) was formed as a subsidiary of Reliance Industries for transportation of gas extracted from RIL's gas fields in KG Basin. On August 18, 2004, RGTIL while it was still a 100 % subsidiary of RIL was granted approval by the petroleum ministry to transport 80 million units of gas per day from Kakinada to Bharuch, passing through four states - AP, Karanataka, Maharashtra and Gujarat.
On April 21, RIL chairman Mukesh Ambani quietly without any disclosure stripped RGTIL from RIL and converted it into his personal property at a meagre price of just Rs 5 lakhs. Through a maze of private companies owned by Mukesh Ambani namely Lordwest Invest & Trading, Shangrila Invest & Trading, Proline Invest, Jigna Fiscal, Vayudoot Invest & Trading, Yashasvi Holding and Anumati Mercantile, he now controlled 100 per cent of what was till then a 100 % subsidiary of RIL. It was a classic manoeuvre.
All the above companies have Reliance employees as directors. Their registered office addresses are also the same as the other companies (promoters and persons acting in concert of RIL). The registered office address of these individuals are 84A Mittal Court, 505 Dalamal House, 147 Atlanta; all known Reliance Group offices in Mumbai's Nariman Point area.
This year, the Union Budget presented in July inserted a new section 35D in the Income Tax Act, 1961 which allows 100 % of capital expenditure incurred on setting up and operating natural gas or crude oil pipeline network as 100 % tax deduction in the very first year. Capital expenditure is never allowed as revenue expenditure in the first year. The beneficiary of this scam is none other than Mukesh Ambani who has once again twisted the law to suit himself. Sum total accruing to Mukesh Ambani is Rs 20,000 crore.
Saturday, October 24, 2009
Tuesday, October 20, 2009
mukesh ambani's ever growing media empire
MEDIA MONGER
Unobtrusively, the Indian media sweepstakes are changing hue. There is a new media magnate in town and his name is Mukesh Ambani. One of the learnings transposed from the battle with his younger brother Anil was that media had to be controlled. Younger brother Anil used the media to his advantage in the battle for the Ambani inheritance. Slowly and steadily Mukesh Ambani’s gigantic footprint is now visible in the electronic news media. And the planning has been systematic and calibrated. A classical waterfall structure has been used to hide the identity of the real owner through a maze of companies, cross holdings and complex transactions. But a paper trail following the annual returns filed by various involved companies reveals the true identity of Mukesh Ambani. He has managed to systematically carve a wide swathe over the electronic news world. All the operations have been conducted in Ambani’s trademark shadowy manner. With a silent signature using a maze of privately owned companies with bizarre names.
IN THE BAG
Let us look at one of the largest benami owned media empires in India and its architecture. By investing Rs 76 crore in Rajeev Shukla/ Anuradha Prasad owned BAG group companies, Mukesh Ambani has a major presence in TV news channels – News 24, E 24, Dhamal 24 etc. As always a web of disparate and obscure companies which own High Growth Distributors have invested Rs 76 crore to acquire 12 per cent in BAG Films & Media Ltd, 15 per cent in BAG Newsline Network Ltd and 15 per cent in BAG Glamour Ltd.. The clutch of private companies which owns High Growth Distributors are Reliance Commercial Holdings Pvt Ltd, Reliance Investment Enterprises Pvt Ltd, Reliance Explorations Pvt Ltd, Kudrat Investment & Leasing Pvt Ltd, Saumya Finance & leasing Co Pvt Ltd, Ornate Traders Pvt Ltd, Xanti Commercial Pvt Ltd, Tiara Comtrade Pvt Ltd, Hitech Dealers Pvt Ltd and Legal Outsourcing Pvt Ltd.
The Fourth Annual Report (2007-08) of High Growth Distributors Pvt Ltd shows that it has made Long Term Investments in unquoted equity shares fully paid of Hitech Dealers Pvt Ltd, Legal Outsourcing Pvt Ltd, Sarvasiddhi Commercials Pvt Ltd, Xanti Commercial Pvt Ltd and Tiara Comtrade Pvt Ltd. That is not as important as its other investments in equity shares quoted fully paid up in BAG Film Ltd amounting to Rs 26.15 crore, BAG Glamour Pvt Ltd Rs 24.99 crore and BAG Newsline amounting to Rs 24.99 crore. All told High Growth’s investments in BAG Group companies thus comes to Rs 76.15 crore.
The NSE shareholding filing of BAG Films and Media Ltd as of December 31, 2008 clearly states that High Growth Distributors Pvt Ltd owns 13078000 shares amounting to 11.59 per cent of the company. Similarly the Annual Return (Registration No 162904) filed by BAG Newsline Network Pvt Ltd clearly shows that High Growth Distributors Pvt Ltd owns 2571428 shares in the company. The Annual return of BAG Glamour Pvt Ltd (Registration No 160548) similarly shows that High Growth Distributors Pvt Ltd owns 2571428 shares in the company.
HIGH GROWTH
So, who owns High Growth Distributors Pvt Ltd with its Registered Office at 26, Chittranjan Avenue, Kolkata 700012? Legal Outsourcing Pvt Ltd Fourth Annual Report 2007-08 also states that its Registered Office is 26 Chittranjan Avenue, Kolkata 700012. This in turn has investments in Hitech Dealers Pvt Ltd, High Growth Distributors Pvt Ltd, Sarvasiddhi Commercials Pvt Ltd, Xanti Commercial Pvt Ltd and Tiara Comtrade Pvt Ltd. Hitech Dealers is also showing the same address for its Registered Office. And this company too has investments in several of the above mentioned companies. All these companies incidentally have a common auditor - chartered accountant firm in D Dokania and Co.
Xanti Commercial Pvt Ltd has its Registered Office in 84 A Mittal Court, 8th Floor, 224 , Nariman Point, Mumbai 400021 and their auditors are Joy Dalia & Co Xanti’s long term investments are in a wide variety of companies including Reliance Consolidated Pvt Ltd, Reliance Enterprises Holding Pvt Ltd, Reliance Extrusions Pvt Ltd, Reliance Gas Pvt Ltd, Reliance Group Holding, Reliance Group Enterprises, Reliance Group Investments and Holding, Reliance Industries Holding, Reliance Industries Investments and Holding, Reliance Investment and Trading, Reliance Investment Holding, Relogistics Infrastructure, Relogistics based in Pune, Delhi, Rajasthan, Jamshedpur and many more. A usual suspect Tiara Comtrade also pops up in this list. Then the tell tale signs surface.
In the list of related parties with whom transactions have taken place in the past and relationships exist are familiar names – High Growth Distributors and Hitech Dealers. Tiara Comtrade has a similar history. Among its long term investments are listed Reliance Integrated Agrisolutions previously known as Urja Trading, all the Relogistics companies and myriad other names which leave little to imagination. The list of related parties with whom transactions have taken place and relationship exists include High Growth Distributors and Hitech Dealers. Tiara Comtrade’s registered office is the same as Xanti Commercial’s. One of the directors is common – Shailesh Solanki and the majority of the investments are common too. The annual returns of Xanti and Tiara show the funding received from the private companies of Mukesh Ambani through debentures.
INDIA TV
BAG Group of Companies is only one of several outfits controlled by Mukesh Ambani through a web of transactions. Take India TV of Independent News Services. Mukesh Ambani Group through Reliance Chemicals Pvt Ltd, a 100 per cent subsidiary of Reliance Industries (Rs 100 cr); Reliance Ventures Pvt Ltd, another RIL 100 per cent subsidiary (Rs 20.20 cr) and Limca Commercials Rs 24 cr(private company owned by Mukesh Ambani) has invested Rs 145 crore in Shyam Equities Pvt Ltd, All told he has acquired 70,25,765 shares of Rs 10 each for an astounding premium of 1323 per cent.
Tally Solutions jointly controlled by Mukesh Ambani group and Bharat Goenka has Anand Jain and Manoj Modi on its board. Both are well known confidants of Mukesh Ambani. Shyam Equities Pvt Ltd is a 100 per cent subsidiary of Tally. It is a shell company, Tally has actually invested Rs 1.80 lakh only in Shyam. Shyam Equities owns 23 per cent in Independent News Services Pvt Ltd which owns India TV. The Annual Return of Tally Solutions Pvt Ltd 2007-08 registration number 08-12483 clearly shows that Bharat Goenka, his wife Sheela Goenka, Anand Jaikumar Jain and Manoj Harjivandas Modi are directors. The Director’s Report of Tally reveals that it had three subsidiaries including Shyam Equities Pvt Ltd in which it has invested a paltry Rs 179,990. However, the balance sheet audited by Deloitte Haskins & Sells for Shyam Equities Pvt Ltd shows that under the unsecured loans head – Digivision DTH Services, Limca Commercials, Reliance Chemical and Reliance Ventures have forwarded as much as Rs 1,642,028,000 establishing Mukesh Ambani group’s clear cut complicity.
Reliance Industries Ltd’s Annual report page 149 for FY 2007-08 lists Reliance Ventures Ltd as a subsidiary of RIL. Moreover, Reliance Chemicals is shown as a subsidiary under RIL’s disclosure dated October 3, 2008 to the Bombay Stock Exchange. The annual return filed by Limca Commercials Pvt Ltd clearly shows that all the shareholders of Limca have their address at 84A Mittal Court, Nariman Point, Mumbai, the home for all the promoter and privately owned companies of RIL. Yes, this is the same address of Xanti Commercial and Tiara Comtrade which have invested in BAG Films through the waterfall structure route. Finally the Shyam Equities balance sheet seals the deal where under the investments head, it shows that it has made an investment in Independent News Services Pvt Ltd buying 70,25,765 shares of Rs 100 each at premium of Rs 42.33 per share fully paid up valued at cost.
NEWS X
The most recent foray into news media is actually a consolidation of his earlier investments. For long there has been talk that Mukesh Ambani was an investor in the beleaguered INX Media, but there was nothing to substantiate it. Earlier this year, Vinay Chajlani and Jehangir Pocha formed Indi Media to acquire INX News from INX Media. Media industry pegged the size of the deal to roughly Rs 50 crore. That was the official version. The real version is that Vinay Chajlani Group also owns Suvi Info Management and its 100 per cent subsidiary Nai Duniya News and Network Pvt Ltd. By virtue of this, Chajlani also owns Nai Duniya newspapers.
The Annual Returns of Suvi Info Management (Indore) Pvt Ltd (registration number 018339) shows Vinay Chajlani and Sunita Chajlani as shareholders and directors of the company. Importantly, the balance sheet of Suvi Info under schedule C investments shows 6734700 equity shares were owned in Nai Dunia News and Network Pvt Ltd at Rs 57.50 per share amounting to Rs 387245300 or Rs 38 crore.
Mukesh Ambani Group has funded Vinay Chajlani Group investing Rs 38 crore in Suvi Info through Aarthik Commercials Pvt Ltd. Aarthik Commercials is a private company owned by Mukesh Ambani, as always through a web of front companies namely Reliance Petromarketing Infrastructure, Jamnagar Kandla Pipeline Co, Agni Fuels, Avalanche Fuels, Jubilant Autofuels Trading, Steadfast Fuel Trading. All these private companies once again throw up the same name – Reliance Industries. Schedule B of Suvi Info’s balance sheet 2006-07 shows an unsecured loan given by Aarthik Commercials amounting to Rs 38 crore. The Annual Returns filed by Aarthik Commercials, 307 Parekh Market, 3rd Floor, 39, Jagannath Shankar Seth Road, Opra House, Mumbai list all the names given above. Each of these entities Jubilant, Avalanche, Agni, Reliance Petromarketing, Steadfast Fuel and Jamnagar Kandla own 10,000 shares between them in the company. And the address for all these entities a dead giveaway – Ground Floor, Chitrakoot, Shreeram Mills Compound, Gantpatrao Kadam Marg, Worli, Mumbai 400013, a known RIL establisment.
In many ways, Mukesh Ambani has tried very hard to conceal his identity. While the RIL promoter has stuck to his theme of compartmentalizing one investment from the other, the paper trail leaves no doubt in anyone’s mind. When one connects the dots, it is evident that Mukesh Ambani wants to control media by making strategic investments in the electronic media. The investments are extremely strategic – an English news channel News X, a Hindi news channel – India TV which caters to the lowest common sensibilities and another Hindi news and Bollywood channel – BAG Group. Finally there is the big investment in a slew of regional channels (see Box).
THE BIG ONE
The mother of all his investments in the media sector is the one in Eenadu newspaper and ETV Network which controls and owns ETV Telugu, Bangla, Bihar, Gujarati, Kannada, Madhya Pradesh, Marathi, Oriya, Rajasthan, Urdu, Uttar Pradesh, ETV 2 (Telugu news channel). This gives Mukesh Ambani complete control of the regional mind space. This investment unlike the others is extremely controversial. Overall, Mukesh Ambani using his oft repeated stratagem has invested Rs 1500 crore in Ushoday Enterprises by acquiring 26930 shares of Rs 100 each at a premium of 528,630 per cent.
When Blackstone Group invested $275 million in Ushoday Enterprises, a virtual tug of war broke out between Ramoji Rao owner of Eenadu and Ushoday on the one hand and late state chief minister Y Rajshekhara Reddy. The late Reddy winged in a spanner saying that Rao could not use the proceeds to pay embattled sister company Margadarsi Financiers. This ultimately resulted in Blackstone having to pull out, such was the ferocity of the opposition. This is when JM Financial promoter Nimesh Kampani arrived as a white knight and made the acquisition on behalf of Mukesh Ambani. Then Kampani himself got entrapped in a case and was reportedly hiding in Dubai.
So how did Kampani front for Reliance Industries? Well he constructed Equator and Altitude to hoodwink the law. But the long arm of the law caught up with him. Reliance Industrial Investment & Holdings (RIIHL) is a 100 percent subsidiary of Reliance Industries. RIIHL is the vehicle through which 10.47 crore (6.66 percent) treasury shares of RIL were held. The RIL Annual Report 2007-08 shows RIIHL as a 100 percent subsidiary. The shareholding pattern of RIL for December 2008 shows the shareholding of the Petroleum Trust. The Petroleum Trust through the Trustees for the sole beneficiary – Ms RIIHL owning 6.66 percent. Since then Mukesh Ambani has extinguished the treasury stock through a buy back which left analysts in a tizzy.
Now RIIHL held the treasury stock through the Petroleum Trust and Nimesh Kampani was the Trustee of the Petroleum Trust. The scheme of Merger of reliance Petroleum Ltd and reliance Industries Ltd of 2002 – page no 166 – shows the provisions of the Trust created for five years. On December 9, 2004, Business Standard reported that Petroleum Trust was not part of the promoter holding in RIL. BS wrote, “Following the amalgamation of Reliance Petroleum with RIL, the shares of RIL were allotted to the trust. RIIHL, being a 100 percent subsidiary of RIL could not hold the shares of the parent company under law. So, the Petroleum Trust was created to house the newly created shares of RIL after the merger. But since the property belonged to RIIHL, it was named the ‘sole beneficiary’implying that all the financial benefits arising out of the ownership of RIL shares would flow to RIIHL.”
When the merger was announced in April 2002, it was stated by then RIL MD Anil Ambani that 12.2 percent (7.5 percent then held by the Trust and 4.7 percent held by RIL associate companies) would be sold to strategic investors, financial institutions or overseas via ADRs or GDRs in five years. The two trustees of the Trust were Nimesh Kampani and Vishnubhai B Haribhakti. But the BSE continues to show the Trust holding as part of promoter holding.
RIIHL formerly known as Trishna Investments and Leasings in turn controls 100 percent equity of Shinano Retail Pvt Ltd. Shinano is held by way of two inter woven and inter linked companies both held under inter se and RIIHL. Once again the leads are provided by the Annual Returns of Shinano Retail (registration no 176418) which held its first AGM as recently as September 22, 2008. The Annexure to clause V of the Companies Act 1956 details that RIIHL (Maker Chambers IV, 222 Nariman Point) and Teesta Retail (Chitrakoot, Shreeram Mills Compound, Worli) held 5000 shares each in the entity as of 22.9.08. Further, these shares were transferred in the names of RIIHL and Teesta by Reliance Elastomers and Reliance Industrial Enterprises respectively on 28.1.08. The same held good for Teesta Retail as well where RIIHL and Shinano Retail held 5000 shares each and the modus operandi was the same as these shares were transferred by Reliance Elastomers and Reliance Industrial Enterprises.
Now comes the classic RIL twist in the tale. Obfuscation being the core value, Shinano has funded Kavindra Commercials with Rs 1054 crore and an additional Rs 952 crore was given to Devki Commercials through convertible loans. Once again, operating through a maze of transactions, both Kavindra and Devki are held inter se and also through inter woven companies namely Teesta and Shinano, accordingly fully held by RIL through its subsidiary. Form 18 of Kavindra and Annual Return dated 26.9.08 of Devki clearly show their addresses as 84A Mittal Court, Nariman Point which are addresses of other Reliance owned entities used to make investments in media companies. Interestingly, schedule I, point number 8 in Annual report of RIIHL (wholly owned subsidiary of RIL) shows Shinano and Teesta as Associate companies from January 28, 2008.
The trail gets stronger when one gets to the balance sheet of Shinano for 2007-08 where schedule D, point number 5 in the notes to accounts shows loan of Rs 1054 crore from Shinano. Similarly the balance sheet of Devki for 2007-08 schedule B, point number 5 in notes to accounts shows loan of Rs 952 crore. Shinano lent an aggregate amount of Rs 2006 crore. Of this Rs 1054 crore is given to Kavindra and Rs 952 crore to Devki. The Annual Returns of Kavindra and Devki show the inter woven shareholding along with Shinano and Teesta.
It is here that Nimesh Kampani is rewarded for his loyalty by Mukesh Ambani. Remember that Kampani was the valuer during the family settlement between the two brothers presided over by the mother. Kavindra then diverted Rs 1054 crore received from Shinano to Altitude Mercantile and Equator Trading through debentures. Now the case gets curiouser. Altitude and Equator are owned privately by Nimesh Kampani. The balance sheet of Kavindra for the year 2007-08, schedule C shows investment of Rs 99.99 crore in debentures of Altitude and investment of Rs 954 crore in debentures of Equator. Devki did likewise, a mirror image of the transaction where it diverted rs 952 crore received from Shinano to Altitude and Equator through debentures. The balance sheet of Devki 2007-08 schedule C shows investment of Rs 100.49 crore in debentures of Altitude and investment of Rs 850 crore in debentures of Equator.
Form 2 filed by Equator Trading Enterprises shows allotment of 1,999,900,000 shares to Altitude Mercantile with 141, Maker Chambers 111, Nariman Point on January 30, 2008, making it a subsidiary. Similarly Form 18 and 32 of Altitude and Equator shows a common address as are the directors on the boards of the company. The crucial link then is Form 2 dated 29.1.2008 filed with the Registrar of Companies by Altitude which shows Kampani Properties and Holdings Ltd (holding 40 percent of the equity) and JM Assets Management holding 15 percent of the equity.
Altitude has used Rs 200 crores received from Kavindra and Devki to acquire equity shares of Equator. Altitude is having a paid up share capital of only Rs 1 crore. Form 2 filed with RoC shows shares allotted to Altitude. If your head is spinning with these names, then the objective has been achieved, for this veritable maze has been deliberately created to confuse the trackers. Equator then used Rs 1424 crores received from Devki and Kavindra to acquire 26,930 equity shares of Rs 100 each at a premium of Rs 528,630 per share of Ushodaya. Once again the paper trail gives the evidence. Since government of India makes it mandatory to make these filings, all this is recorded for posterity.
Form 2 dated 30.1.2008 filed by Ushodaya with RoC shows shares allotted to Equator and premium of Rs 528,630 per share paid. Media reports surface dated 2.2.2008 and 13.2. 2008 on investment in Eenadu Group by private companies of Nimesh Kampani. Ushodaya is the holding company of media baron Ramoji Rao who is the owner of Eenadu Group. Prior to the deal with Kampani, he owned 99.86 percent of Ushodaya.
Now with chief minister YS Reddy having died in an untimely helicopter crash, the decks have been cleared for Kampani’s return to India.
The moot point is that Mukesh Ambani’s octopus like tentacles across the media vector have not been understood by the common man. By enveloping Eenadu, he got a major foothold in the powerful regional media which was important for his retail plans at that point in time. He has also been fighting a legal battle with his brother on KG Basin gas and print and television mouthpieces would only add to his clout to spread disinformation. The idea at all times being to control without coming to the fore. By using his enormous financial clout he has managed to grab several entities. The question is whether they are the right vehicles in this age of fragmented and diffused media.
Tuesday, October 6, 2009
long winded DGH advert of no consequence
DGH V K Sibal is showing unnecessary aggression for a man caught in a cleft stick. I guess he is opting for the old tactic of attack being the best defence. Seeking an extension, Sibal who is battling favouritism and corruption charges is in the dock for helping Reliance Industries gold plate its KG D 6 capex development plan. By putting out a full page advertisement in the national dailies, he is burning a hole in tax payers money. The advert comes a day after the Central Vigilance Commissioner asked the CBI to probe allegations of favours received by the oil regulator from RIL for approving a near four fold hike in the oil field development plan.
This comes quickly on the heels of a Pioneer expose on the nexus between Sibal and RIL and charges of Sibal's daughters enjoying the hospitality of RIL in Mumbai. Sibal when contacted by Pioneer in his usual bluster did not deny that his daughters had stayed in RIL guest houses while studying and working in the city. But as a government regulator in an age of austerity, this nexus is going to cost Sibal dearly. Talk in the capital is that Sibal will not get an extension after October 31 and the feeble attempts at putting out an advertisement in the press don't count at this stage.
We wonder whether the oil minister Murli Deora approved this insertion by the DGH and whether L N Gupta, CVO in the oil ministry knew of this advertisement. Austerity be damned as the independent republic of oil ministry continues in its merry ways.
Thursday, September 17, 2009
sibal - mr crony capitalism
The Pioneer's investigation on Thursday on the nexus between RIL and DGH VK Sibal has once again exposed the allegations of crony capitalism in India's bureaucracy. What is perhaps more intriguing is Sibal's reaction to the expose where he brazens it out by saying - so what?
Here is the Pioneer lead story. Judge for yourself:
CVC examining use of RIL facilities by DG Hydrocarbon’s daughters Caesar’s wife must be above suspicion”: The famous saying holds relevance even today, particularly for those who are in public service. But, some just don’t care. VK Sibal, the Director General Hydrocarbons whose extension of tenure is under CVC scanner, is suspected to have taken favours for his daughters — Priya and Sonia Sibal — from Reliance Industries Limited (RIL), the company whose capital expenditure plan for KG Basin was increased from $2.4 billion to $8.8 billion in 2006. Sibal had given the approval for this. In this connection, Sibal had raised a controversy when he declared that, in 2005-06, CAG had approved the capital expenditure of KG D6 fields, a claim the CAG denied stating that no such approval had been accorded.Sibal is to end his tenure on October 31, 2009. But the Minister of Petroleum has recommended two-year extension for him, which needs clearance from the CVC. However, the CVC is in a fix following complaints of Sibal’s proximity with several business contractors whose project clearances were accorded by him.Even while RIL’s request for increasing capex for KG basin was pending before Sibal, the information with The Pioneer indicates that Sibal’s daughters used posh RIL guesthouses in Mumbai extensively for four-five months.As Director General Hydrocarbons, Sibal would not have faced any problem in arranging a guesthouse for his daughters in Mumbai, as all public sector oil companies, including ONGC, IOC and GAIL, have such facilities in the metropolis. But his choice for RIL’s guesthouse raises eyebrows, as it is inappropriate to accept favours from a contractor, who is coming for sanction of his projects.Sonia Sibal stayed at a VIP guesthouse of RIL — Dalal House — from July to November 2005. Dalal House is said to be the erstwhile residence of Nita Ambani. In November same year, Sibal's another daughter Priya Sibal also stayed at Dalal House. Later, from April to July 2006, Priya stayed at another guesthouse of RIL —Trivoli Guest House — at Hiranandani in Mumbai.According to sources, the CVC is also looking into the ‘relationship’ between Sibal and RIL, especially when hands off distance should have been maintained.The matter does not end here. Later, Priya moved out of RIL’s guesthouse and shifted to a spacious 3BHK flat in Avalon at Hiranandani Gardens, Powai. But, the host still remained the same. This is how: RIL acquired a small firm called Whitesnow Trading Private Limited in May 2008 and the flat was bought in the name of Whitesnow in the same month.Whitesnow Trading Private Limited was incorporated in March 2006 by Vijay Dargar and Reena Dargar. After RIL’s acquisition in May, officials of RIL — Nilesh M Mehta and Deepa Sangani —were appointed directors of Whitesnow.Priya's stay in this flat can be proved from the fact that Whitesnow, in a letter dated June 7, 2006, wrote to the apartment asking them "to issue club house ID card to Priya and her family". The demands made by Priya in her e-mail on July 17, 2006 included an LG television and refrigerator and Whirlpool washing machine.The guest was so important for RIL that top notch officials of the company "personally" took care of making her stay comfortable. The supervision of furnishing, furniture and installation of white goods worth Rs 6.5 lakh in the flat was "personally" was done by president of RIL's Oil and Gas Division PMS Prasad and chief financial controller LV Merchant. They approved these expenses also.Sibal has been continuously saying that his relationship with RIL is "only official". These words even found resonance in his reply to Director (Vigilance) Maninder Singh in December 14, 2007. Do these personal care accorded by RIL officials signify the relation being official in any way, as claimed by Sibal?It's altogether a different matter that Priya moved from Avalon after 18 months of stay to another flat in Oshimara, Andheri West, purchased at a cost of Rs 1.7 crore. But for Sibal, the practice of taking favours from contractors seems natural. Unethical it might be, but Sibal continues to avail favours from his contractors. His present residence in Noida is rented to him by a company called Ambience Exim Private Limited. Sibal might like to call this a coincidence, but this company "secured oil and gas block in the Government of India's auction process".VK Sibal: I didn’t favour RIL in exchange.
The Pioneer sought VK Sibal’s response with regard to the allegations. This is his response:“My daughter, Priya was staying in various locations in Mumbai since the year 2001. She was staying in a private accommodation in Kalina, Mumbai, in the year 2005. However, during the floods in Mumbai, the area she was staying got flooded due to which she went missing for 2 days and had to shift to an apartment located on higher grounds for a few days as a stop-gap emergency measure.My daughter Sonia was studying in the Institute of Hotel Management, Aurangabad, during the period 2004-07 and was staying in a hostel.My daughter Priya had a lease agreement with the party for the flat in Hiranandani referred by you for which advance was also paid. An amount of Rs 3 lakh and utility charges of Rs 3,000 per month was paid. She stayed off and on with her friend in the same accommodation. Necessary documentary evidence in support of this is available with us. Notwithstanding the fact that this is a bonafide arrangement, it is surprising that you should allege that favours have been taken from RIL. If these allegations were true, there would not have been any need to pay the advance or the utility charges to the owner. Contrary to your allegation that favors were taken from RIL, a penalty was imposed on RIL during the period October-November 2006 amounting to approximately Rs 89 crore against unfinished work programme in their petroleum exploration acreages, details of which are available with us.I do not understand as to why you should link purely official responsibilities with bonafide personal dealings. I am sure that you can understand the hidden agenda of the people behind these allegations and propaganda. The story has been circulated among the media surreptitiously by vested interests. It is surprising that a well-known newspaper should fall prey to the machinations of a vested interest. Despite the above clarifications, if you still want to publish the story, it will be even more obvious that a section of the media has been pressurised or influenced by an interested party.”
Here is the Pioneer lead story. Judge for yourself:
CVC examining use of RIL facilities by DG Hydrocarbon’s daughters Caesar’s wife must be above suspicion”: The famous saying holds relevance even today, particularly for those who are in public service. But, some just don’t care. VK Sibal, the Director General Hydrocarbons whose extension of tenure is under CVC scanner, is suspected to have taken favours for his daughters — Priya and Sonia Sibal — from Reliance Industries Limited (RIL), the company whose capital expenditure plan for KG Basin was increased from $2.4 billion to $8.8 billion in 2006. Sibal had given the approval for this. In this connection, Sibal had raised a controversy when he declared that, in 2005-06, CAG had approved the capital expenditure of KG D6 fields, a claim the CAG denied stating that no such approval had been accorded.Sibal is to end his tenure on October 31, 2009. But the Minister of Petroleum has recommended two-year extension for him, which needs clearance from the CVC. However, the CVC is in a fix following complaints of Sibal’s proximity with several business contractors whose project clearances were accorded by him.Even while RIL’s request for increasing capex for KG basin was pending before Sibal, the information with The Pioneer indicates that Sibal’s daughters used posh RIL guesthouses in Mumbai extensively for four-five months.As Director General Hydrocarbons, Sibal would not have faced any problem in arranging a guesthouse for his daughters in Mumbai, as all public sector oil companies, including ONGC, IOC and GAIL, have such facilities in the metropolis. But his choice for RIL’s guesthouse raises eyebrows, as it is inappropriate to accept favours from a contractor, who is coming for sanction of his projects.Sonia Sibal stayed at a VIP guesthouse of RIL — Dalal House — from July to November 2005. Dalal House is said to be the erstwhile residence of Nita Ambani. In November same year, Sibal's another daughter Priya Sibal also stayed at Dalal House. Later, from April to July 2006, Priya stayed at another guesthouse of RIL —Trivoli Guest House — at Hiranandani in Mumbai.According to sources, the CVC is also looking into the ‘relationship’ between Sibal and RIL, especially when hands off distance should have been maintained.The matter does not end here. Later, Priya moved out of RIL’s guesthouse and shifted to a spacious 3BHK flat in Avalon at Hiranandani Gardens, Powai. But, the host still remained the same. This is how: RIL acquired a small firm called Whitesnow Trading Private Limited in May 2008 and the flat was bought in the name of Whitesnow in the same month.Whitesnow Trading Private Limited was incorporated in March 2006 by Vijay Dargar and Reena Dargar. After RIL’s acquisition in May, officials of RIL — Nilesh M Mehta and Deepa Sangani —were appointed directors of Whitesnow.Priya's stay in this flat can be proved from the fact that Whitesnow, in a letter dated June 7, 2006, wrote to the apartment asking them "to issue club house ID card to Priya and her family". The demands made by Priya in her e-mail on July 17, 2006 included an LG television and refrigerator and Whirlpool washing machine.The guest was so important for RIL that top notch officials of the company "personally" took care of making her stay comfortable. The supervision of furnishing, furniture and installation of white goods worth Rs 6.5 lakh in the flat was "personally" was done by president of RIL's Oil and Gas Division PMS Prasad and chief financial controller LV Merchant. They approved these expenses also.Sibal has been continuously saying that his relationship with RIL is "only official". These words even found resonance in his reply to Director (Vigilance) Maninder Singh in December 14, 2007. Do these personal care accorded by RIL officials signify the relation being official in any way, as claimed by Sibal?It's altogether a different matter that Priya moved from Avalon after 18 months of stay to another flat in Oshimara, Andheri West, purchased at a cost of Rs 1.7 crore. But for Sibal, the practice of taking favours from contractors seems natural. Unethical it might be, but Sibal continues to avail favours from his contractors. His present residence in Noida is rented to him by a company called Ambience Exim Private Limited. Sibal might like to call this a coincidence, but this company "secured oil and gas block in the Government of India's auction process".VK Sibal: I didn’t favour RIL in exchange.
The Pioneer sought VK Sibal’s response with regard to the allegations. This is his response:“My daughter, Priya was staying in various locations in Mumbai since the year 2001. She was staying in a private accommodation in Kalina, Mumbai, in the year 2005. However, during the floods in Mumbai, the area she was staying got flooded due to which she went missing for 2 days and had to shift to an apartment located on higher grounds for a few days as a stop-gap emergency measure.My daughter Sonia was studying in the Institute of Hotel Management, Aurangabad, during the period 2004-07 and was staying in a hostel.My daughter Priya had a lease agreement with the party for the flat in Hiranandani referred by you for which advance was also paid. An amount of Rs 3 lakh and utility charges of Rs 3,000 per month was paid. She stayed off and on with her friend in the same accommodation. Necessary documentary evidence in support of this is available with us. Notwithstanding the fact that this is a bonafide arrangement, it is surprising that you should allege that favours have been taken from RIL. If these allegations were true, there would not have been any need to pay the advance or the utility charges to the owner. Contrary to your allegation that favors were taken from RIL, a penalty was imposed on RIL during the period October-November 2006 amounting to approximately Rs 89 crore against unfinished work programme in their petroleum exploration acreages, details of which are available with us.I do not understand as to why you should link purely official responsibilities with bonafide personal dealings. I am sure that you can understand the hidden agenda of the people behind these allegations and propaganda. The story has been circulated among the media surreptitiously by vested interests. It is surprising that a well-known newspaper should fall prey to the machinations of a vested interest. Despite the above clarifications, if you still want to publish the story, it will be even more obvious that a section of the media has been pressurised or influenced by an interested party.”
Monday, September 14, 2009
ril's task getting onerous
The waters are getting muddier and muddier for Reliance Industries. In the run up to the SC hearings on the Ambani gas opera beginning from October 20 on Monday, Anil Ambani group firm RNRL fired a fresh salvo seeking to intervene in the NTPC-RIL gas dispute in the Supreme Court (SC), saying the issues raised by the power PSU directly affected its own case against the Mukesh Ambani-led firm. In an intervention application filed with the apex court, RNRL said that RIL's argument, placed by way of an amendment to its written statements in NTPC suit, is an issue in the SLP (special leave petition) filed by RIL in the Supreme Court in the RIL-RNRL matter.
"It is submitted that the issues that arise in the case filed by NTPC in the Supreme Court directly affect its (RNRL's) case against Reliance Industries," RNRL said, adding it was therefore necessary that it was permitted to be impleaded as a party in the NTPC-RIL case. It is clear that RNRL is now using the NTPC intervention as a rump to further its own case. It needs to be mentioned that the basic premise of RNRL's $2.34 per million unit for 17 years is NTPC's gas supply contract with RIL for a similar price and tenure. The same has been validated by the Bombay High Court in its judgment of June 15.
NTPC moved the Supreme Court on September 5, challenging a Bombay High Court decision that allowed RIL to amend its petition on the gas dispute citing the government's pricing policy. A Division Bench of the High Court had allowed amendment in the petition wherein RIL had prayed that the government's gas pricing policy would frustrate its contract with NTPC.
NTPC had moved the Bombay High Court seeking 12 million units of gas from RIL, which had emerged winner in a global competitive bid quoting a price of $2.34 per million unit. RIl has challenged the Bombay High Court verdict in favour of RNRL in the SC.
"It is submitted that the issues that arise in the case filed by NTPC in the Supreme Court directly affect its (RNRL's) case against Reliance Industries," RNRL said, adding it was therefore necessary that it was permitted to be impleaded as a party in the NTPC-RIL case. It is clear that RNRL is now using the NTPC intervention as a rump to further its own case. It needs to be mentioned that the basic premise of RNRL's $2.34 per million unit for 17 years is NTPC's gas supply contract with RIL for a similar price and tenure. The same has been validated by the Bombay High Court in its judgment of June 15.
NTPC moved the Supreme Court on September 5, challenging a Bombay High Court decision that allowed RIL to amend its petition on the gas dispute citing the government's pricing policy. A Division Bench of the High Court had allowed amendment in the petition wherein RIL had prayed that the government's gas pricing policy would frustrate its contract with NTPC.
NTPC had moved the Bombay High Court seeking 12 million units of gas from RIL, which had emerged winner in a global competitive bid quoting a price of $2.34 per million unit. RIl has challenged the Bombay High Court verdict in favour of RNRL in the SC.
Sunday, September 13, 2009
ril's illegal levy
Reliance Industries is increasingly getting boxed in. Between NTPC and RNRL's pincer moves, RIL has no room to manoeuvre. Its only fall back being that the cases are pending in SC. NTPC's devastating critique of RIL's malafide intent in not providing gas despite having signed a gas supply agreement has now been followed up by RNRL's attck on RIL charging unauthorised marketing margins.
This is resulting in a potential loss of Rs 10,000 crore to the government in the form of subsidies to power and fertiliser firms. RNRL latest charge is,"RIL's illegal levy of marketing margin is a double whammy. On the one hand the government is denied its lawful share of the additional sales realisation generated by RIL through this levy; and on the other hand the government also has to eventually pay for this additional burden in the form of enhanced subsidy for the fertiliser and power sectors. A shocking case of illegal transfer of over Rs 10,000 crore from government coffers to RIL."
RIL is charging unauthorised marketing margin of 13.5 cents (Rs 6.6) per million unit on the sale of D6 block in KG Basin. The government meanwhile is moving towards protecting its interests in KG Basin gas by giving priority to state owned petrochemical plants and refineries over RIL's downstream facilities. RIL has demanded 20 million units of gas for captive requirement. The government will consider RIL's request only when the allocation of next 40 million units per day is considered.
This is resulting in a potential loss of Rs 10,000 crore to the government in the form of subsidies to power and fertiliser firms. RNRL latest charge is,"RIL's illegal levy of marketing margin is a double whammy. On the one hand the government is denied its lawful share of the additional sales realisation generated by RIL through this levy; and on the other hand the government also has to eventually pay for this additional burden in the form of enhanced subsidy for the fertiliser and power sectors. A shocking case of illegal transfer of over Rs 10,000 crore from government coffers to RIL."
RIL is charging unauthorised marketing margin of 13.5 cents (Rs 6.6) per million unit on the sale of D6 block in KG Basin. The government meanwhile is moving towards protecting its interests in KG Basin gas by giving priority to state owned petrochemical plants and refineries over RIL's downstream facilities. RIL has demanded 20 million units of gas for captive requirement. The government will consider RIL's request only when the allocation of next 40 million units per day is considered.
Wednesday, September 9, 2009
family demerger incomplete as ril plays truant
With RNRL replying to the RIL SLP with a fresh affidavit in the SC, the rules of battle when the court begins its hearing have been spelt out. RNRL has made a very important observation in its fresh affidavit. It says that the supply of gas by RIL to RNRL is an integral part of the demerger of the family business. It also says that that the production sharing contract between RIL and the government gave the former freedom to price and market the gas.
By not giving the gas to RNRL, RNRL is now clearly taking the position that the demerger of the family business remains incomplete and it is well within the purview of the apex court to ensure that this process is completed rapidly. The affidavit filed by RNRL counsel Mahesh Aggarwal has thus raised important questions of the sanctity and legality of the family business demerger.
The affidavit says, "The scheme contemplates that suitable arrangement to be put in place for supply of gas. Until and unless a suitable arrangement is executed, the scheme is not fully implemented and the demerger of the business is not complete." By raising a fundamental question on the validity of the family demerger, RNRL is now asking the SC to enforce its closure. The scheme of demerger has been ratified by the board of RIL of which Mukesh Ambani is chairman, its shareholders and of course the Bombay High Court and yet Mukesh Ambani continues to play truant with the gas supply.
The affidavit also goes on to say that the RIL-RNRL agreement for supply of gas does not affect the government's gas utilisation policy - under the PSC, the supply of gas is not subject to any gas utilisation policy. The petitioners - RIL and the oil ministry - are seeking to misinterpret the terms of the PSC to suggest that any sale of gas has to be in accordance with the gas utilisation policy. Brace yourself for some exciting hearings in the SC.
By not giving the gas to RNRL, RNRL is now clearly taking the position that the demerger of the family business remains incomplete and it is well within the purview of the apex court to ensure that this process is completed rapidly. The affidavit filed by RNRL counsel Mahesh Aggarwal has thus raised important questions of the sanctity and legality of the family business demerger.
The affidavit says, "The scheme contemplates that suitable arrangement to be put in place for supply of gas. Until and unless a suitable arrangement is executed, the scheme is not fully implemented and the demerger of the business is not complete." By raising a fundamental question on the validity of the family demerger, RNRL is now asking the SC to enforce its closure. The scheme of demerger has been ratified by the board of RIL of which Mukesh Ambani is chairman, its shareholders and of course the Bombay High Court and yet Mukesh Ambani continues to play truant with the gas supply.
The affidavit also goes on to say that the RIL-RNRL agreement for supply of gas does not affect the government's gas utilisation policy - under the PSC, the supply of gas is not subject to any gas utilisation policy. The petitioners - RIL and the oil ministry - are seeking to misinterpret the terms of the PSC to suggest that any sale of gas has to be in accordance with the gas utilisation policy. Brace yourself for some exciting hearings in the SC.
Sunday, September 6, 2009
tried and tested acolytes try damage limitation
News doing the rounds over the last week or so in capital town is that RIL's man in the Rajya Sabha - MP Parimal Nathwani - is running around trying to do deals on behalf of his master in the run up to the SC hearing fixed for October 20 and beyond. Using the forthcoming Diwali festival as an excsuse, he is trying to provide gifts and such items to various players in the gas opera.
After proclaiming his loyalty to his master Mukesh Ambani on the floor of the house recently, the Gujarat strongman who is chief lieutenant Manoj Modi's brother in law is busy talking up one and all in the capital. Manoj Modi incidentally is running black ops in the Mukesh Ambani camp, though one hears that discredited Anand Jain is also back in the hunt to manage the gas environment. With oil minister Murli Deora keeping a low profile after the PM reprimanded him over his shoddy conduct in the whole gas affair, Mukesh Ambani is using his tried and tested acolytes. It remains to be seen whether these cartridges are spent or loaded.
ntpc finally in the SC mix
After making all the right noises in the recent past, NTPC has stuck to its stand and is ready to challenge Reliance Industries in the Supreme Court for displaying malafide intent vis a vis its commitment to supply gas to the Kawas and Gandhar plants. By filing an appeal on Saturday, it questioned RIL's attempts at wriggling out. Moreover, it challenged a Bombay High Court order allowing RIL to change its stand midway through the hearing on the PSU's pending specific performance suit.
The NTPC appeal assumes tremendous significance for two reasons - RIL cancelled its gas supply contract by sending a letter to NTPC on June 17, 2005 saying that it was 'unconcluded' when the Ambani family MoU was made public on the morning of June 18, 2005 and even more vitally, the terms and conditions of the RNRL-RIL contract for gas supply were based on the price and tenure of NTPC's contract with RIL signed much earlier. This clearly showed RIL's corporate misconduct because it realised that it would now have to supply gas to two entities almost simultaneously - NTPC and RNRL - at $2.34 per million unit for a period of 17 years. Gredde overcame everything else at this stage and RIL began to paper over the reality of supplying gas to two corporate entities and reneged using the oil ministry and DGH to fight its battles.
However, both RNRL and NTPC dragged RIL to the Bombay High Court resulting in the case falling in the SC's lap after much arguing. Against this background, NTPC's appeal will in the apex court will definitely have some bearing on the RNRL-RIL case as well because in many ways it is all intertwined. NTPC has faulted the July 30 HC order of the Bombay HC saying that it does not recognise the sanctity of the commitment given by RIL which won the tender through a global bidding process quoting the lowest rate - the said $2.34.
Its 76 page appeal obviously written by government law officers slammed RIL for using some pretext or the other. Both the AG and the SG were unanimous that NTPC's rights and interests needed to be protected against RIL. Their observations were hard hitting and have been taken on board the NTPC appeal.
The NTPC appeal assumes tremendous significance for two reasons - RIL cancelled its gas supply contract by sending a letter to NTPC on June 17, 2005 saying that it was 'unconcluded' when the Ambani family MoU was made public on the morning of June 18, 2005 and even more vitally, the terms and conditions of the RNRL-RIL contract for gas supply were based on the price and tenure of NTPC's contract with RIL signed much earlier. This clearly showed RIL's corporate misconduct because it realised that it would now have to supply gas to two entities almost simultaneously - NTPC and RNRL - at $2.34 per million unit for a period of 17 years. Gredde overcame everything else at this stage and RIL began to paper over the reality of supplying gas to two corporate entities and reneged using the oil ministry and DGH to fight its battles.
However, both RNRL and NTPC dragged RIL to the Bombay High Court resulting in the case falling in the SC's lap after much arguing. Against this background, NTPC's appeal will in the apex court will definitely have some bearing on the RNRL-RIL case as well because in many ways it is all intertwined. NTPC has faulted the July 30 HC order of the Bombay HC saying that it does not recognise the sanctity of the commitment given by RIL which won the tender through a global bidding process quoting the lowest rate - the said $2.34.
Its 76 page appeal obviously written by government law officers slammed RIL for using some pretext or the other. Both the AG and the SG were unanimous that NTPC's rights and interests needed to be protected against RIL. Their observations were hard hitting and have been taken on board the NTPC appeal.
Wednesday, September 2, 2009
oil ministry backs down on family mou
In damage limitation exercises, newly appointed RIL ED PMS Prasad may be flying journalists to the KG Basin to give them an update on the gas opera, but with the government amending its Special Leave Petition, it is now crystal clear that the case to be heard before the Supreme Court will focus on the same two issues - interpretation on the price of gas and the gas utilisation policy, as was the case before the Bombay High Court earlier. All manner of tweaking that the oil ministry tried to give the case has been summarily dropped due to the incessant media pressure from RNRL.
The Bombay High Court had asked RIL to supply 28 million units per day at $2.34 for 17 years, against which RIL appealed to the apex court. Now the key here is that the RNRL-RIL contract was signed before the gas utilisation policy which the oil ministry in its fresh appeal to the SC wants set aside. Even more categorically the decks have been cleared for the protection of NTPC's interests, something that RNRL and other group shareholders were asking for through a media blitz which culminated in a a series of adevrtisements in all small and big newspapers. The EGoM of September 12, 2007 had approved the gas price of $4.2 per million unit at a crude price greater or equal to $60 per barrel.
The entire handling of this gas row by the oil ministry has deeply embarrassed the government. Now that a new EGoM is being constituted, it would be right for Murli Deora to distance himself from this unseemly row and allow the government to direct the oil ministry to simply allocate the requisite amount of gas to NTPC on a nomination basis so that Kawas and Gandhar can be kick started. This will render the NTPC-RIL case infructuous and resolve one part of this quadrangular fight.
The Bombay High Court had asked RIL to supply 28 million units per day at $2.34 for 17 years, against which RIL appealed to the apex court. Now the key here is that the RNRL-RIL contract was signed before the gas utilisation policy which the oil ministry in its fresh appeal to the SC wants set aside. Even more categorically the decks have been cleared for the protection of NTPC's interests, something that RNRL and other group shareholders were asking for through a media blitz which culminated in a a series of adevrtisements in all small and big newspapers. The EGoM of September 12, 2007 had approved the gas price of $4.2 per million unit at a crude price greater or equal to $60 per barrel.
The entire handling of this gas row by the oil ministry has deeply embarrassed the government. Now that a new EGoM is being constituted, it would be right for Murli Deora to distance himself from this unseemly row and allow the government to direct the oil ministry to simply allocate the requisite amount of gas to NTPC on a nomination basis so that Kawas and Gandhar can be kick started. This will render the NTPC-RIL case infructuous and resolve one part of this quadrangular fight.
Tuesday, September 1, 2009
deora dares, plan panel strikes down
With Murli Deora asking for a reconstitution of the EGoM to allocate gas from the KG Basin fields beyond 40 million units, the Planning Commission instead wants the oil ministry to adopt the recommedndations laid out in the Integrated Energy Policy on the pricing of gas. Deora believes that there is a need to revive the mechanism so that gas can be allocated beyond the 40 million levels to new customers, but Montek Singh headed Plan Panel wants its recommendations to be reflected in the note that the oil ministry is preparing for the Cabinet on the contentious issue of gas pricing.
The Integrated Energy Policy contends that as the shortage of natural gas was likely to continue, its price, allocation should be independently regulated on a cost plus basis including reasonable returns. Deora who is known to do abrupt about turns on policy is now wondering what to do next. Though he met principal secretary to PM T K A Nair over the weekend to present his case for a new EGoM on the lines of the previous one headed by Pranab Mukherjee, it remains to be seen which path he will follow now.
Will his Cabinet note mirror realities or will they be full of flights of fancy in order to show his unstinted support to RIL chairman Mukesh Ambani? Or will he listen to the Plan Panel and take their recommendations on board. All this needs to be done quickly because with the Supreme Court deciding to hear the Ambani gas opera from October 20, Deora will find that time is not on his side. After all he will also have a role to play in the forthcoming Maharashtra elections. In what capacity, no one knows for sure?
The Integrated Energy Policy contends that as the shortage of natural gas was likely to continue, its price, allocation should be independently regulated on a cost plus basis including reasonable returns. Deora who is known to do abrupt about turns on policy is now wondering what to do next. Though he met principal secretary to PM T K A Nair over the weekend to present his case for a new EGoM on the lines of the previous one headed by Pranab Mukherjee, it remains to be seen which path he will follow now.
Will his Cabinet note mirror realities or will they be full of flights of fancy in order to show his unstinted support to RIL chairman Mukesh Ambani? Or will he listen to the Plan Panel and take their recommendations on board. All this needs to be done quickly because with the Supreme Court deciding to hear the Ambani gas opera from October 20, Deora will find that time is not on his side. After all he will also have a role to play in the forthcoming Maharashtra elections. In what capacity, no one knows for sure?
Sunday, August 30, 2009
cag up in arms over ril reluctance
Even as RIL mounts its counter offensive against RNRL with a series of letters to the oil ministry debunking ADAG claims on hoarding of KG Basing gas, it needs to look at itself in the mirror and check whether is weel vis a vis lies and more lies. CAG has rejected the audit meet records, saying that the oil ministry is circulating details sans its views on expenses by RIL. After DGH V K Sibal put out a release on his website on August 5 saying that CAG had completed its audit of RIL's Andhra offshore field costs which proved to be false, the battle has escalated. The very next day CAG denied this saying that it had problems accessing papers of private firms. This led to red faces both in DGH and oil ministry. One doubts whether Mukesh Ambani is ever red faced or embarrassed about anything.
Now CAG has accused the oil ministry of circulating records of two crucial meetings without its concurrence or confirmation on the issue of auditing the expenses incurred by private companies, in developing oil and gas fields. CAG's principal director of audit has slammed the records sent on August 24, telling the ministry that they do not fully reflect the discussions that took place or take into account the government's auditors prerogative and views.
Expressing reservations over the record on RIL's field, the CAG latter said, "The understanding of our audit team was that during the meeting, the contractor's representative expressed considerable reluctance to provide access to records for the previous years till 2006-07 and no dates for the entry conference were discussed or decided during the meeting... such a conference will have full purpose only when we have documented clarity about our exact audit access. So far we have not received any such written confirmation of such access."
Despite RIL's protests over everything being above board as far as KG D6 fields capital expenditure development plans not being gold plated, it is clear that it continues to obstruct and obfuscate CAG's attempts to get to the bottom of the case. Will truth reveal itself?
Now CAG has accused the oil ministry of circulating records of two crucial meetings without its concurrence or confirmation on the issue of auditing the expenses incurred by private companies, in developing oil and gas fields. CAG's principal director of audit has slammed the records sent on August 24, telling the ministry that they do not fully reflect the discussions that took place or take into account the government's auditors prerogative and views.
Expressing reservations over the record on RIL's field, the CAG latter said, "The understanding of our audit team was that during the meeting, the contractor's representative expressed considerable reluctance to provide access to records for the previous years till 2006-07 and no dates for the entry conference were discussed or decided during the meeting... such a conference will have full purpose only when we have documented clarity about our exact audit access. So far we have not received any such written confirmation of such access."
Despite RIL's protests over everything being above board as far as KG D6 fields capital expenditure development plans not being gold plated, it is clear that it continues to obstruct and obfuscate CAG's attempts to get to the bottom of the case. Will truth reveal itself?
Thursday, August 27, 2009
Sc hearing deferred
Just when everyone thought that the Ambani gas opera will provide more girst for their mills, the Supreme Court has deferred the hearing of the controversial case to October 20. On Friday, a bench headed by chief justic K G Balakrishnan decided to pose the matter for October after RIL counsel suggested the matter be heard on October 20. With RNRL counsel Mukul Rohatgi agreeing, the matter has been deferred.
Till yesterday, the war of missives continued unabated with both RIL and RNRL dashing off letters. With advertisements having stopped, RNRL asked the oil ministry why it was not protecting NTPC's claims, given that it was a government company and as such should have been covered under 'national interest'? This is the plea that the oil ministry has strangely taken in the RIL-RNRL case, but has taken a subjective view in the NTPC case where its claim of 12 million units per day for 17 years and $2.34 has not been taken seriously by the government.
In any case, the hearing could not have taken place on September 1, the originally designated date as the CJI is busy with a five member Constitutional Bench till the first week of the month. Expect more fireworks in media in the meantime, for the battle between the fraternal brothers will only escalate now.
Till yesterday, the war of missives continued unabated with both RIL and RNRL dashing off letters. With advertisements having stopped, RNRL asked the oil ministry why it was not protecting NTPC's claims, given that it was a government company and as such should have been covered under 'national interest'? This is the plea that the oil ministry has strangely taken in the RIL-RNRL case, but has taken a subjective view in the NTPC case where its claim of 12 million units per day for 17 years and $2.34 has not been taken seriously by the government.
In any case, the hearing could not have taken place on September 1, the originally designated date as the CJI is busy with a five member Constitutional Bench till the first week of the month. Expect more fireworks in media in the meantime, for the battle between the fraternal brothers will only escalate now.
super charged NTPC
Just when poor NTPC claims in the gas opera were being cast aside due to the oil ministry's ambivalent attitude towards the power ministry, the governemnt law officers were given a wake up call by an emboldened NTPC CMD R S Sharma. Threatening to walk out of a high profile briefing session, Sharma made it amply clear to one and all in the room on the company's interlocutory petition to be filed in the SC.
Sharma was furious with the draft petition, saying that it did not safeguard NTPC's concerns on the issue of protecting future gas supplies from RIL. Times of India has reported that Sharma put his foot down on the sensitive issue. NTPC will not be party or respondent, but will certainly have a significant say in the matter before the SC. With the Chief Justice busy with a Constitutional Bench hearing, this matter will come up before a three division bench on September 4 or 5 now. Thereafter a short duration hearing will take place.
NTPC's claims on 12 million unitsper day for 17 years at $2.34 are critical to RNRL's position in this entire gas opera. RIL had won a global tender floated by NTPC in 2003 at $2.34. Since then Mukesh Ambani and RIL got greedy and changed his mind hiding behind the frockcoat of oil minister Murli Deora. As part of the RIL scheme of demerger, RIL was to supply gas at a similar price to RNRL for a similar period of 17 years. Only the quantity of gas was 28 million units per day. Surprising that it has taken NTPC six years to really take a stand in this matter, though a case is pending in the Bombay High Court against RIL.
Sharma was furious with the draft petition, saying that it did not safeguard NTPC's concerns on the issue of protecting future gas supplies from RIL. Times of India has reported that Sharma put his foot down on the sensitive issue. NTPC will not be party or respondent, but will certainly have a significant say in the matter before the SC. With the Chief Justice busy with a Constitutional Bench hearing, this matter will come up before a three division bench on September 4 or 5 now. Thereafter a short duration hearing will take place.
NTPC's claims on 12 million unitsper day for 17 years at $2.34 are critical to RNRL's position in this entire gas opera. RIL had won a global tender floated by NTPC in 2003 at $2.34. Since then Mukesh Ambani and RIL got greedy and changed his mind hiding behind the frockcoat of oil minister Murli Deora. As part of the RIL scheme of demerger, RIL was to supply gas at a similar price to RNRL for a similar period of 17 years. Only the quantity of gas was 28 million units per day. Surprising that it has taken NTPC six years to really take a stand in this matter, though a case is pending in the Bombay High Court against RIL.
Wednesday, August 26, 2009
litigation and more litigation
While RNRL, RIL, NTPC and the Government read oil ministry wear tight cumerbunds as they gird their loins to go into battle before the Supreme Court next week, as an aside a different kind of litigation proceedings have begun. Media which has benefited most because of the gas opera with juicy tidbits being leaked by both sections and of course a handsomne front page campaign by RNRL has now been slapped with defamatory notices for carrying those advertisements by Reliance Industries.
All 33 big, small and regional newspapers have reportedly received defamatory legal notices from India's biggest corporation. Even more interestingly one of the top editors who writes a Sunday column in a national daily has also been slapped with a similar notice for his fictional writing of facts by RNRL. Though media was having the last laugh till now enjoying both the news and revenues from the two sides, they are a trifle more circumspect now after RIL's missile. At the same time it has angered media bosses for they reckon a defamatory notice from RIL amounts to some sort of media censorship.
Expect more legal notices in the next few days and perhaps the odd advertisement also. The gas opera will now go into overdrive from next week, but expect nuggets, sorry skeletons to fall out of cupboards before that.
All 33 big, small and regional newspapers have reportedly received defamatory legal notices from India's biggest corporation. Even more interestingly one of the top editors who writes a Sunday column in a national daily has also been slapped with a similar notice for his fictional writing of facts by RNRL. Though media was having the last laugh till now enjoying both the news and revenues from the two sides, they are a trifle more circumspect now after RIL's missile. At the same time it has angered media bosses for they reckon a defamatory notice from RIL amounts to some sort of media censorship.
Expect more legal notices in the next few days and perhaps the odd advertisement also. The gas opera will now go into overdrive from next week, but expect nuggets, sorry skeletons to fall out of cupboards before that.
Tuesday, August 25, 2009
reality check for oil ministry
Instead of tuning up the volume, suddenly the oil ministry has chosen to tune it down considerably. Belligerence has been cast aside by the oil ministry in the face of the sustained campaign by RNRL to nail the truth. With lies, more lies and damned statistics being the operational plank for RIL supported by the oil ministry in the shameless campaign to obfuscate the real issues relating to the NTPC and RNRL gas supply deals, it has decided that objectivity is the only way forward in the SC. A clarifactory affidavit is being filed which will focus on the core issue of the production sharing contract between itself and RIL and the pricing of the gas.
All bellicose statements like 'MoU and family agreement between RIL and RNRL is null and void in the face of national interest involved in distribution of natural gas' have been expunged. All inflamatory statements like 'RIL and RNRL have appropriated, through the MoU, in a surreptitious and unauthorised manner, the entire gas treating the same as their personal and family property' have also been struck out. Even more interestingly, when it filed its appeal on July 18 in unseemly haste, it forgot to seek the SC's leave to file special leave petition. Ahem.
But even more shockingly, NTPC says RIL bid mum on government approvals, despite bidder having signed contract with centre much earlier in 2000. This has added a new dimension to the gas opera.It has written to the government saying, "From the information available with us, it is learnt that the PSC was signed by RIL with the government in 2000. While submitting its bid in 2003, they were fully aware of the provisions of the PSC. RIL in its bid never stated that the contract shall require the government's approval." NTPC CMD R S Sharma has written this to power secretary H SD Brahma queering the pitch for Mukesh and Murli completely just days before the apex court sits to hear the controversial matter.
All bellicose statements like 'MoU and family agreement between RIL and RNRL is null and void in the face of national interest involved in distribution of natural gas' have been expunged. All inflamatory statements like 'RIL and RNRL have appropriated, through the MoU, in a surreptitious and unauthorised manner, the entire gas treating the same as their personal and family property' have also been struck out. Even more interestingly, when it filed its appeal on July 18 in unseemly haste, it forgot to seek the SC's leave to file special leave petition. Ahem.
But even more shockingly, NTPC says RIL bid mum on government approvals, despite bidder having signed contract with centre much earlier in 2000. This has added a new dimension to the gas opera.It has written to the government saying, "From the information available with us, it is learnt that the PSC was signed by RIL with the government in 2000. While submitting its bid in 2003, they were fully aware of the provisions of the PSC. RIL in its bid never stated that the contract shall require the government's approval." NTPC CMD R S Sharma has written this to power secretary H SD Brahma queering the pitch for Mukesh and Murli completely just days before the apex court sits to hear the controversial matter.
NTPC SLP could be differentiator
In a dramatic decision, public sector power utility NTPC has decided to file a Special Leave Petition in the Supreme Court within the next few days. With power secretary H S Brahma confirming this development, NTPC despite the best efforts of the oil ministry to impede its progress in the matter is going ahead to secure its rights. Better sense has prevailed within the power as it goes out to protect its rights of procuring 12 million units of gas per day for a period of 17 years from RIL at the contracted price of $2.34 per million unit.
NTPC has been fighting a case in the Bombay High Court to get gas from RIL at the contracted price of $2.34, but RIL has reneged on this saying that NTPC doesn't have a concluded contract. This is an important landmark in the ongoing gas row because this will establish the floor price for gas at $2.34. The NTPC price became the basis of RIL-RNRL gas pricing for a similar period of 17 years. The oil ministry tried its level best to dissuade NTPC from doing the same, suggesting that the company wait for the outcome of its case against RIL pending in the Bombay High Court. Once the NTPC SLP is filed, it will become a unique quadrangular case with RNRL, oil ministry, NTPC and RIL in the apex court. RIL filed a SLP against RNRL verdict in Bombay High Court, oil ministry impleaded itself with another SLP and NTPC will now protect its interests with yet another SLP this time against RIL.
Fortunately the power ministry demanded that the oil ministry delete all statements that are injurious to NTPC's interest from its counter affidavit and SLP, filed in the SC cross appeals. The power ministry had identified 22 such paragraphs that were construed to be harmful to NTPC's interest. Finally victory for justice seekers and not those out to subvert the system.
NTPC has been fighting a case in the Bombay High Court to get gas from RIL at the contracted price of $2.34, but RIL has reneged on this saying that NTPC doesn't have a concluded contract. This is an important landmark in the ongoing gas row because this will establish the floor price for gas at $2.34. The NTPC price became the basis of RIL-RNRL gas pricing for a similar period of 17 years. The oil ministry tried its level best to dissuade NTPC from doing the same, suggesting that the company wait for the outcome of its case against RIL pending in the Bombay High Court. Once the NTPC SLP is filed, it will become a unique quadrangular case with RNRL, oil ministry, NTPC and RIL in the apex court. RIL filed a SLP against RNRL verdict in Bombay High Court, oil ministry impleaded itself with another SLP and NTPC will now protect its interests with yet another SLP this time against RIL.
Fortunately the power ministry demanded that the oil ministry delete all statements that are injurious to NTPC's interest from its counter affidavit and SLP, filed in the SC cross appeals. The power ministry had identified 22 such paragraphs that were construed to be harmful to NTPC's interest. Finally victory for justice seekers and not those out to subvert the system.
Saturday, August 22, 2009
the channel of babble
On Friday, the oil ministry hit back at the Anil Ambani advertising campaign choosing to describe it as 'unfortunate... propaganda.' It was obviously just as important as the advertising campaign which had been unleashed for over five days, but it was not the government closing ranks against the interloper, but only the section that was targeted - the oil ministry which was reacting to the damaging copy in the adverts. But the channel of babble - CNBC TV 18 - decided to up the ante on this oil ministry rebuttal. Calling it a government rebuttal, it went over the top using words which did not do justice to the channel's standing and credibility. It was high pitched with one particular reporter - Siddharth Zarabi - unleasing his tongue to create a fearsome spectre of the government where none existed.
It was vital to the oil ministry's Special Leave Petition in the Supreme Court to react to the campaign which has demolished its case and mobilised public opinion. The oil ministry perforce had to react in some form or the other as it has been shown in extremely poor light these last few days. Its tenuous case in the apex court would have been irretrievably eroded. But the channel of babble which has been very balanced in this dispute till now simply lost it in that space of half and hour. The reporter Zarabi just lost his head and turned the oil ministry release into some sort of draconian crackdown on ADAG talking nonsense and drivel without comprehending facts as they were being played out.
It was left to the more balanced Shereen Bhan to venture into the sandpit to soothe and calm the debate and add a balanced twist to it. Otherwise reporters like Zarabi who seem to have no understanding of important matters like the gas row would have been allowed to do a naked jig on live television. This distinction between what the oil ministry refuting ADAG charges against it and the government as a whole hitting back at ADAG needs to be made clear for it provides a perspective on how acutely the faultlines are drawn even inside the government on this issue.
The next morning's newspapers were clear in their understanding - they articulated that the oil ministry statement said, "the government will protect the interest of its generation utility NTPC by all means." Which means that ADAG and its 8 million shareholders had managed to convince the oil ministry of its duty to prtest and serve the interests of government owned PSU NTPC in the gas supply case. A very clear message which Mr Zarabi failed to read. Moreover, Zarabi and the channel of babble for that half and hour tried to convince viewers that the government read oil ministry was enforcing the $4.20 price for the supply of gas. Nowehere was that said in the statement, all it said was that the EGom had set a $4.20 price. What was conveniently forgotten was the Bombay High Court judgment of June 15 which fixes price and tenure for RNRL at $2.34 and 17 years.
CNBC TV 18 which is widely respected amongst the corporate and market watching community would do well to ensure that its reporters are literate enough to understand the nuances of a simple release from the oil ministry.
It was vital to the oil ministry's Special Leave Petition in the Supreme Court to react to the campaign which has demolished its case and mobilised public opinion. The oil ministry perforce had to react in some form or the other as it has been shown in extremely poor light these last few days. Its tenuous case in the apex court would have been irretrievably eroded. But the channel of babble which has been very balanced in this dispute till now simply lost it in that space of half and hour. The reporter Zarabi just lost his head and turned the oil ministry release into some sort of draconian crackdown on ADAG talking nonsense and drivel without comprehending facts as they were being played out.
It was left to the more balanced Shereen Bhan to venture into the sandpit to soothe and calm the debate and add a balanced twist to it. Otherwise reporters like Zarabi who seem to have no understanding of important matters like the gas row would have been allowed to do a naked jig on live television. This distinction between what the oil ministry refuting ADAG charges against it and the government as a whole hitting back at ADAG needs to be made clear for it provides a perspective on how acutely the faultlines are drawn even inside the government on this issue.
The next morning's newspapers were clear in their understanding - they articulated that the oil ministry statement said, "the government will protect the interest of its generation utility NTPC by all means." Which means that ADAG and its 8 million shareholders had managed to convince the oil ministry of its duty to prtest and serve the interests of government owned PSU NTPC in the gas supply case. A very clear message which Mr Zarabi failed to read. Moreover, Zarabi and the channel of babble for that half and hour tried to convince viewers that the government read oil ministry was enforcing the $4.20 price for the supply of gas. Nowehere was that said in the statement, all it said was that the EGom had set a $4.20 price. What was conveniently forgotten was the Bombay High Court judgment of June 15 which fixes price and tenure for RNRL at $2.34 and 17 years.
CNBC TV 18 which is widely respected amongst the corporate and market watching community would do well to ensure that its reporters are literate enough to understand the nuances of a simple release from the oil ministry.
Friday, August 21, 2009
I, me, mine a mindless pursuit
The Times of India in a front page story has said that the PM is keen that a middle ground is found by the two warring Ambani brothers in the ugly gas row. Is it possible that the two brothers can kiss and make up at this late stage of the no holds barred fight? Will the PM's words cap the flare up? A flare up which has seen an unprecedented vitriolic attack on the oil ministry and a high decibel advertising campaign in all small and large dailies in the country. The only positive after the government issued a statement is that the advertising did not appear on Saturday morning, but the breather could well be due to the onset of the weekend.
The PM's soothing words to the brothers may well see some sort of conciliation between the two camps, but the question is who will play interlocutor. Will matriach Kokilaben Ambani play mediator again? Will the battle be resolved within the confines of Seawind, the family residence? Interestingly, the non compete agreement between the two brothers ends in June 2010. Can the two brothers sit down and resolve all ending issues? The PM's take is that both are two big to fail and fall now. The two groups are the biggest in Indian business. Against this backdrop, Anil Ambani has written a very illuminating piece in Speaking Tree in the Times of India where he highlights the Trust factor, saying that it is everything and that it needs to be nurtured.
Suggesting that his father Dhirubhai built his business on the foundation of trust by naming his company Reliance, Anil believes that the message that was being sent out to one and all in public domain was that - you can rely on me. Increasingly since his death, Reliance is something that cannot be trusted is the allusion that Anil gives through his article. That Reliance Industries under his brother has turned into a 'I, me and mine' type of corporation and institution only highlights the erosion of Dhirubhai's value systems and a major trust deficit. Anil Ambani writes, "How easy it is to let the obsession with self - I, me, mine - vitiate even the purest, most selfless of relationships - the bond between a child and his mother.' Clearly hinting at the trust deficit again between Mukesh Ambani and the mother Kokilaben by not honouring the tenets of the family settlement initiated by the matriach.
Does the fine print of this piece by Anil Ambani in ToI's Speaking Tree make you believe that there can be any sort of rapprochement or mediation. Doesn't seem so. Mukesh Ambani only believes in might is right to get his own way. The last few lines of the article which reflect the inner pain go like this - "Can one break a word spoken solemnly in her presence (mother)? And if one does - in the mindless pursuit of power, ego or material riches - what has one gained, and more importantly, what has one lost?
The PM's soothing words to the brothers may well see some sort of conciliation between the two camps, but the question is who will play interlocutor. Will matriach Kokilaben Ambani play mediator again? Will the battle be resolved within the confines of Seawind, the family residence? Interestingly, the non compete agreement between the two brothers ends in June 2010. Can the two brothers sit down and resolve all ending issues? The PM's take is that both are two big to fail and fall now. The two groups are the biggest in Indian business. Against this backdrop, Anil Ambani has written a very illuminating piece in Speaking Tree in the Times of India where he highlights the Trust factor, saying that it is everything and that it needs to be nurtured.
Suggesting that his father Dhirubhai built his business on the foundation of trust by naming his company Reliance, Anil believes that the message that was being sent out to one and all in public domain was that - you can rely on me. Increasingly since his death, Reliance is something that cannot be trusted is the allusion that Anil gives through his article. That Reliance Industries under his brother has turned into a 'I, me and mine' type of corporation and institution only highlights the erosion of Dhirubhai's value systems and a major trust deficit. Anil Ambani writes, "How easy it is to let the obsession with self - I, me, mine - vitiate even the purest, most selfless of relationships - the bond between a child and his mother.' Clearly hinting at the trust deficit again between Mukesh Ambani and the mother Kokilaben by not honouring the tenets of the family settlement initiated by the matriach.
Does the fine print of this piece by Anil Ambani in ToI's Speaking Tree make you believe that there can be any sort of rapprochement or mediation. Doesn't seem so. Mukesh Ambani only believes in might is right to get his own way. The last few lines of the article which reflect the inner pain go like this - "Can one break a word spoken solemnly in her presence (mother)? And if one does - in the mindless pursuit of power, ego or material riches - what has one gained, and more importantly, what has one lost?
Thursday, August 20, 2009
oil conundrum
The malaise in India's oil and gas sector goes much deeper than just the recent gas opera featuring RNRL, RIL and NTPC where Mukesh Ambani aided and abetted by the oil ministry is trying to ensure that might is right in order to prevent execution of concluded contracts on gas supply. As much as 87 per cent of India's oil and gas acreage is with a duopoly - ONGC and RIL. One understands ONGC for there is a legacy system involved. ONGC being India's premier exploration company till RIL decided to enter this sector and tried to turn it in to a monopoly from what was till recently a duopoly.
What is not so well known is that India's famous New Exploration Licensing Policy has been an abject failure over the last three years. None of the global big five - Exxon, Shell, Chevron, Statoil and Conoco Phillips - have ever participated in these bids. Instead ONGC holds 57 per cent of all acreage, RIL holds 30 per cent and others consisting of more than 50 bit players have just 13 per cent of the NELP acreage.
Failure or success is for one and all to judge. The idea of converting India's upstream sector into a multiplayer competitive market has failed miserably. This despite tens and thousands of dollars being spent by the oil ministry and DGH to conduct road shows in key energy capitals across the world - Moscow, London, Houston etc. Sadly nobody is willing to bite. So claims by Cairn and RIL of mega discoveries in both oil and gas have not impressed the big boys. So, where is the question of the gas row affecting sentiment and global investment flows into India's energy sector. This is another one those myths perpetrated by the oil ministry/DGH to keep the rest of the government happy.
During the seventh round of NELP, no bids were received for 12 (over 20 per cent) out of 57 blocks; only a single bidder participated for 19 (over 30 per cent) out of 57 blocks and production sharing contracts are yet to be signed for 16 (over 25 per cent) blocks. This is a serious reality check for the government to examine the mismanagment of the oil and gas sector in the country.
A case of fictionalising fact Mr Deora and Mr Sibal. Even as you tom tom successes notched by the oil and gas sector in India. Nobody other than RIL wants to touch India with a bargepole. And you want to keep it that way.
What is not so well known is that India's famous New Exploration Licensing Policy has been an abject failure over the last three years. None of the global big five - Exxon, Shell, Chevron, Statoil and Conoco Phillips - have ever participated in these bids. Instead ONGC holds 57 per cent of all acreage, RIL holds 30 per cent and others consisting of more than 50 bit players have just 13 per cent of the NELP acreage.
Failure or success is for one and all to judge. The idea of converting India's upstream sector into a multiplayer competitive market has failed miserably. This despite tens and thousands of dollars being spent by the oil ministry and DGH to conduct road shows in key energy capitals across the world - Moscow, London, Houston etc. Sadly nobody is willing to bite. So claims by Cairn and RIL of mega discoveries in both oil and gas have not impressed the big boys. So, where is the question of the gas row affecting sentiment and global investment flows into India's energy sector. This is another one those myths perpetrated by the oil ministry/DGH to keep the rest of the government happy.
During the seventh round of NELP, no bids were received for 12 (over 20 per cent) out of 57 blocks; only a single bidder participated for 19 (over 30 per cent) out of 57 blocks and production sharing contracts are yet to be signed for 16 (over 25 per cent) blocks. This is a serious reality check for the government to examine the mismanagment of the oil and gas sector in the country.
A case of fictionalising fact Mr Deora and Mr Sibal. Even as you tom tom successes notched by the oil and gas sector in India. Nobody other than RIL wants to touch India with a bargepole. And you want to keep it that way.
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