Wednesday, April 16, 2014

Veerappa Moily's Rs. 52,000 crore gift to Essar Oil: alleges AAP





Aam Aadmi Party (AAP) alleged that the UPA government was going ahead on the award of hydrocarbon fields in the country's western offshore to the Essar group despite no contract having been signed by the two parties, which can potentially cause a loss of Rs.52,000 crore to the national exchequer.

Ratna and R-series is a discovered medium sized oil and gas field on western off-shore around 130 km south west of Mumbai. This field has estimated cumulative oil production of 12.33 million metric tonnes and 1285 mmscm of natural gas over a project life of 22 years. At current prices of $100 per barrel of oil and $4.2 per mmbtu of natural  gas the value is $9 billion and $189 million respectively, totalling $9.2 billion.

Bidding was initiated in 1993 and Essar Oil and Premier Oil Ltd were the successful bidders and were given only the Letter of award in 1996. The contract  was not signed. The contract negotiations with the bidders could not start due to CAG observations and CBI investigations on the contracts awarded to other parties. The issue at hand is whether the field can be given to Essar even though the bid conditions are 18 years old and the price of oil has increased 6 times in this period, given the fact that the contract was never signed.

In 1999, a Negotiating Team of Secretaries (NTS) was formed with members from Finance, Law and Petroleum.the Cabinet Secretary had in the year 2008 itself warned that there would be a huge revenue loss for the government and that the contract had not been duly concluded.

The Finance Secretary in two letters dated 17.11.2011 and 13.2.2012 also reiterated these views.The  matter was also referred to the SG, AG and the Law Ministry a number of times over the years. Finally, the Law Minister opined in October 2012.The Petroleum Minister, Shri Veeraapa Moily overruled the officials on dubious grounds.
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