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Blaming Modi-led Gujarat government of crony capitalism, Congress seeks JPC
Friday April 8, 2016 10:52 PM, IANS

New Delhi: Reiterating their demand for a JPC probe to take note of a CAG report on the KG basin gas blocks, Congress on Friday alleged Gujarat State Petroleum Corporation (GSPC) suffered from crony capitalism.

Around Rs.19,576 crore were invested in KG basin gas blocks by the then Gujarat government led by Narendra Modi, the present day prime minister.

Demanding the Joint Parliamentary Committee probe, Congress leader Shaktisinh Gohil said if not a JPC then Supreme Court's two-bench judge-monitored probe should be conducted.

The Comptroller and General (CAG) report, tabled in the Gujarat assembly on March 31, said there was no 'commercial production' in the gas blocks, and questioned the project's "financial viability".

Taking note of the report, senior Congress leader Jairam Ramesh said: "'Modi Model' of malicious enrichment of a private company i.e. GeoGlobal Resources (India) and its parent American company, GeoGlobal Resources Inc. is proved by gifting away 10 percent of free shares (without charging a single paisa) in the 'KG Basin Gas Block'."

"This crony capitalism has been taken to another height of plunder of public money by Gujarat government and Gujarat State Petroleum Corporation (GSPC) investing Rs.1,734.60 crore from public exchequer on behalf of GeoGlobal Resources (India) Inc. without recovering a single penny," said Ramesh.

The CAG report stated: "As on March 31 2015, the outstanding dues recoverable from JV (joint venture) partners were Rs.2,329.52 crore, of which Rs.2,319.43 crore was in respect of three blocks.

"For KG block, JV partners were GeoGlobal Resources (India) Inc (with an outstanding amount of Rs.1,734.60 crore) and Jubilant Offshore Drilling Pvt. Ltd. (with an outstanding amount of Rs.313.65 crore. For North Hap'y block and South Diyur blocks, the JV partner was Alkor Petro with an outstanding amount of Rs.223.36 crore and Rs.47.82 crore, respectively," the report stated.

The CAG report further said: "Procedural lapses like delayed execution of Joint Operating Agreements (JOA), inadequacy in providing information on operations and in conduct of meetings led to disputes by the non-operator and accumulation of dues.

"This led to the company incurring expenditure of Rs. 2,319.43 crore for the share of the E&P activities of JV partners in the operated blocks which had remained unrecovered till date (November 2015)."

Ramesh said: "In March 2002, GSPC inked a Carried Interest Agreement (CIA) with GeoGlobal under which GSPC invested all funds for the operations in the KG Basin Gas Block, including the share of GeoGlobal and all this was to be done entirely at the sole risk of GSPC. GeoGlobal was eligible for all benefits and profits that may accrue without sharing any risk.

"GeoGlobal was given a 10% share free of cost. GeoGlobal was chosen 'secretly' without following any transparent procedure and contrary to established principles.

"It had no obligation to pay a single penny for "either cost and expenses" incurred in exploration or development of KG Basin Gas Block. However, the capital stock of GeoGlobal stood at a meager US$64 only (barely Rs.3,000/-)," he added.

Among the few questions asked by Congress were how was GeoGlobal Resources Inc. selected as a partner of GSPC for KG Basin Gas Block? Why was the 'selection of GeoGlobal' shrouded in secrecy without following any 'transparent procedure'? Why was GeoGlobal offered 10 percent free share in KG Basin Gas Block by GSPC, more so when it had a capital stock of only $64 (Rs.3,000)?

Among other questions, the Congress wanted to know: "Why did GSPC ink a 'Carried Interest Agreement' (CIA) with GeoGlobal under which GSPC was required to invest all funds including shares of GeoGlobal, and GeoGlobal was eligible for only profit without sharing any risk?

"Why did GSPC invest Rs.1,734.60 crore from public funds on behalf of GeoGlobal Resources without recovering a single penny as recorded by CAG", the leader asked.

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