kejri

Dear Mr Arvind Kejriwal,

With reference to your letter to Shri Narendra Modi over Gas price issue, I would also like to bring to your notice that there is huge scam in Oil/Crude. I am really surprised. How come an anti-corruption activist like you has not spoken against it?

I hope after reading following details, you will take up this matter and take appropriate action against all Crude Oil Producers in India.

Crude/Oil Production     Figures in BBL & Amount in $ Mln
Year 2007-08 2008-09 2009-10 2010-11 2011-12 Total
India Prodn

245.736

241.272

241.272

271.368

273.744

1273.392

India PVT/JV Prodn

36.648

33.624

37.872

69.696

76.968

254.808

OIL/ONGC (A)

209.088

207.648

203.4

201.672

196.776

1018.584

Crude Oil Price /BBL in $ (B)

79.25

83.57

69.76

85.09

111.89

 

Cost of Prodn /BBL in $ (C)

33.76

33.76

33.76

33.76

33.76

 

Profit (D) = (B-C)*A

9511.413

10342.95

7322.4

10351.82

15374.11

52902.69

Note 1: Crude Price is picked up from statistics released by Petroleum Ministry

Note 2: Cost per BBL is cost of production in US based on 2007-09 Data

 

Sir, as you can observe there is scam of $52 Billion dollars. Both BJP and Congress are silent on this issue; well even you have been silent so far. But it should not be of great concern to you. You have chance of exposing this big scam. This scam is an injustice done to the Aam Aadmi. AAP should pick up this cause and expose the corrupt oil producers of India.

I have listened to your speech at CII. I am quite impressed by your thoughts on gas pricing. When I heard you speaking, “Why should we get gas at market price? From our wells, we should get it at basic cost, plus some profits”, I thought if there is an issue with reference to gas price not being Cost Plus, why there is no issue with crude oil? Crude oil has been sold at market prices for a long time and no one has bothered to comment on it. Hence I calculated $52 billion of scam.

Some of the facts I have noted below are also mentioned in article written by R Jagannathan, I am not sure whether you have read it or not? If not read, do you expect Narendra Modi to also take your letter seriously? But anyways let’s go to some detail:

  • Article 21.6 of the PSC provides for sale of gas at competitive, arm’s length price, to the benefit of parties to the Contract and it also provides that the gas price formula/basis have approval of the Government prior to the sale of natural gas to consumers/buyers. I hope you being ex IRS officer understand what arm’s length price means?
  • I wondered where you got figure of $2.35 in your article. A friend pointed out that you were referring to legal dispute going between RIL and NTPC. NTPC alleged that RIL has agreed to supply 12 MMSCMD at $ 2.35 for 17 years. This matter is sub judice, I would have appreciated if you would have questioned asp tp why even after close to 10 years there is no movement of the case.
  • Supreme Court in another case but with respect to KG basin D6 ruled that contractor is free to market gas but it cannot finalise the gas price. Correct question to be asked to our policy makers is why there is a policy flip flop with respect to government’s position on Crude pricing vis-à-vis Oil Price. As you can see yourself there is scam of more than $52 Billion with respect to crude sales. Why are you not demanding Cost Plus price for crude also?
  • Planning commission has estimated that in 12th plan more than half of India’s Gas demand is fulfilled by imported gas. I hope you are aware that imported gas is priced on an avg $ 12-$ 15. Why not demand imported gas to be price at cost plus? If they don’t agree, you can always do dharna in front of the respective embassy! 1/4th of production will be produced by PVT/JV. And 1/4th will be produced by OIL/ONGC. If government wants to decide Gas price keeping in mind interest of RIL, shouldn’t you demand same price for OIL and ONGC? But Sir, I am sorry to disappoint you; new price is also applicable to OIL and ONGC. I know you don’t care for details and references but I do. The following is a quick look at demand vs production estimate under 12th Plan.

  • R Jagannathan in his article addressed to you has highlighted that higher sales price means higher profit for contactors. As per PSC terms profit earned by contractors needs to be shared with Government of India. So with high price government is going to get a benefit as well, so where is the issue Mr Arvind Kejriwal?
  • Do you remember last December you made scam allegation against Gujarat Government and Narendra Modi in particular, did you take the matter to court? If not why have you not cared so far, after all you had all the proof with you! By the way I wrote some details on the same account at that time, I am not sure whether you will be interested to know but in this link you will find my point by point counter to your allegation.

To summarise, will you care to expose Crude Oil producers in India? They get market price for their production. Gas Producers are still getting price fixed by government. You have been consistently making wild allegations against your political adversary without proving anything!

I am not surprised R Jagannathan said “Mr Kejriwal, grow up. Your open letter to Modi is all gas, no economics.”

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Kalpesh Chavda

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