New Delhi, Oct 31: S. Jaipal Reddy was axed as petroleum minister for refusing a Mukesh Ambani-led Reliance Industries’ proposal to hike charges of gas it supplied to state-run power plants, India Against Corruption’s Arvind Kejriwal charged Wednesday, demanding that the Krishna Godavari basin allotted to the company be taken back.
“Mukesh Ambani is running the country it seems,” Kejriwal told the media here. “Jaipal Reddy was removed as he refused to hike the charges levied by Reliance Industries to supply gas to the NTPC (National Thermal Power Corp).”
Reliance called the charges “irresponsible”.
According to Kejriwal, the KG basin was awarded to Reliance in 2000 by the NDA government when the company agreed to supply gas to the NTPC for the next 17 years at $2.34 per unit.
But, said Kejriwal, the company revised the rate to $4.25 per unit in 2007 which then finance minister Pranab Mukherjee agreed to as the head of an empowered group of ministers.
“The entire contract was meant to benefit Reliance because … the cost would be determined by the company, and if the cost increases, so will the profit,” he said, adding this was unheard of in business.
The company, he said, revised the rate to $4.2 per unit in 2007, which then finance minister Pranab Mukherjee agreed to as head of an empowered group of ministers, benefiting Reliance to the tune of Rs.10,000 crore.
Kejriwal alleged that in 2006 then petroleum minister Mani Shankar Iyer was removed and Murli Deora brought in to increase Reliance Industries’ capital expenditure from $2.39 billion to $8.8 billion, and to hike gas price from $2.34 per unit to $4.2 per unit.
Later, the company wanted the rate further hiked to $14.2. Jaipal Reddy, who reportedly did not agree to the proposal, was shunted out in Sunday’s cabinet rejig, said the activist-politician.
Kejriwal released to the media a “secret” document of the petroleum ministry that said that accepting the Reliance demand would generate for it an additional profit of Rs.43,000 crore ($8.5 billion).
“In order to pressurize the government, RIL substantially reduced its production of natural gas,” a statement from India Against Corruption said.
“Production has been artificially kept low to blackmail the government. They are not just hoarding the gas but also forcing various consumers to buy gas from abroad.”
When Reliance sought Prime Minister Manmohan Singh’s intervention, he asked the attorney general to find out if the gas prices should be hiked or not.
“Why did the PM not show similar concern when NTPC was forced to accept higher gas price from RIL? Why is the PM not pulling up Reliance for not producing gas as per their commitment? Why did the PM not seek legal opinion when the country’s interests were at stake?”
Kejriwal, who was flanked by fellow activists Prashant Bhushan and Manish Sisodia, demanded that Reliance Industries’ “blackmailing should be immediately stopped.
“Their KG Basin contract should be cancelled. The government should immediately put in place adequate systems to get full production from KG Basin at the cheapest price for the country.”
The Bharatiya Janata Party (BJP) asked the prime minister to respond to IAC and explain why Jaipal Reddy was dropped from the petroleum ministry.
“Is it any malfunction in the ministry that has persuaded Manmohan Singh to effect this change? Or is that Jaipal Reddy was not found a ‘convenient’ minister? Or is this another example of corporate interests taking precedence over national good?” BJP leader Jaswant Singh asked.