The timing of the police action and the media circus that followed raise eyebrows. Is the government serious about cleaning up its act to ensure secrecy of its decisions? Are there other factors that worked in this case, in which, as is being claimed, documents from the petroleum ministry were routinely and clandestinely photocopied by a gang of four people, and sold to corporate houses and consultancy firms?
Going by the evidence, the latter may be true. This is not to deny that the theatrics are not rooted in any facts. No one denies that the petroleum ministry had gaping holes through which documents were leaked to businessmen, middlemen, lobbyists, consultants and, of course, the media.
The RIL connection
Paranjoy Guha Thakurta’s book, Gas Wars: Crony Capitalism and the Ambanis, and allegations hurled by the Aam Admi Party (AAP) against Reliance Industries Ltd, an oil and gas major, were based on such leaks. Both claimed they had documents to prove that the Mukesh Ambani-owned RIL was favoured by past governments to earn whopping profits, either through high natural gas price or partial sale of gas assets.
However, the rationale behind this episode, and the manner in which it is being played up, is to send political and other signals to several stakeholders. The overarching idea is to make Narendra Modi, the prime minister, a hero among Indian and foreign investors.
In the past few months, his image has taken a dip: even insiders within the BJP and Sangh Parivar contend that Modi speaks well, but lacks action. Therefore, the prime minister wanted to do something to convince critics that his government works better than the previous ones.
First, its aim is to hit back at RIL to boost Modi’s image. For the past few years, the elder Ambani brother has found himself on the back foot for several reasons. The first was the campaign against him by petroleum ministers (Jaipal Reddy), politicians (Arvind Kejriwal), former bureaucrats (EAS Sarma), lawyers (Prashant Bhushan) and journalists (Thakurta) on the issue of gas price.
RIL lobbied UPA-II (previous regime) to double the domestic price from $4.2 a unit to $8.4. The Election Commission kept the order in abeyance because of the 2014 national elections. When Modi came to power, it was felt that he will play ball because of his proximity to Ambani. But the price was increased to only $5.6, and was a huge blow to RIL’s business plan and financials.
Another point of contention between Modi and Ambani is about the arbitration case, which relates to RIL’s offshore gas assets (KG-D6) in the Krishna-Godavari basin, off the coast of Andhra Pradesh. Here too, the events went contrary to Ambani’s expectations. NDA-II continued to claim that the previous regime was correct when it disallowed $2.3 billion to RIL because of lower gas production.
Through both these decisions, Modi sent signals to his critics that he wasn’t close to the Ambani Group, as alleged. But these did not work since millions of viewers saw the two Ambani brothers, along with other industrialists, cosy up to Modi in Gujarat. Media wrote pieces that Gautam Adani of the Adani Group has earned huge largesse from this government.
The document leak case, which named RIL, will send a stronger signal that while Modi is pro-industry, he is not pro-certain business groups like Ambani or Adani. Modi was also unhappy that contrary to his diktat, sensitive documents related to the KG-D6 arbitration case and other ministerial decisions reached the RIL and other corporate offices before they made it to his office.
However, the decisions will anger the senior Ambani as they will create further rifts with his foreign partner, BP (formerly British Petroleum), which has a 30 per cent stake in the former’s gas assets. A few days ago, BP said it will reduce the value of its share in RIL’s gas assets by $830 million.
Ironically, the day the Delhi Police made the arrests public RIL announced that it had appointed Maheshwar Sahu, a former IAS officer from Gujarat, as an independent director. Sahu is a Modi loyalist and handled the latter’s pet projects like ‘Vibrant Gujarat’ summits.
The names of energy companies like the Essar Group and Cairns India are included in the present case to prepare grounds for the next round of auction of oil and gas blocks in India. Modi hopes to showcase the much-delayed, but forthcoming, auction – NELP X (Tenth round under the New Exploration Licensing Policy) – as another feather in his cap, just like the coal block and spectrum auctions.
The case aims to convince the foreign oil conglomerates that Modi is serious in his efforts to inculcate transparency and clean up governance. Unlike the previous NELP auctions, the investors are likely to enthusiastically participate in NELP X. The successes of coal, oil and gas, and spectrum auctions will boost official revenues and establish Modi as a leader who makes things happen.
This is critical because Modi has little room to manoeuvre on the financial front. His finance minister needs revenues to control the fiscal deficit. If the natural resources auctions fail, the government will be caught in a trap, and all hopes for higher economic growth will vanish. This will force the masses to dub Modi as a failure, which is something he cannot digest.
The fall guy
Santanu Saikia, who was questioned by the police, is the fall guy. He runs an energy portal, www.indianpetro.com, and allegedly indulges in buying the ministry’s documents to grab corporate subscriptions for his website. Several years ago, he asked this journalist to join his group, and explained the job entailed writing short pieces from such documents.
His business model apparently involved selling many of these documents to his corporate clients, who included the large state-owned and smaller private energy companies. The flow of documents to the latter will stop. Thus, even the state entities will be starved of information related to the Centre’s decisions.
After this case, the bureaucrats will be cagey to dole out documents to their favourites in the oil and gas sector, including lobbyists and consultants. Other ministries will get the message that they could be arrested if they indulged in similar practices.
In a single swoop, Modi hopes to plug information holes in his government. He wants to cut off the information flow from the various ministries to either state-owned, Indian private or foreign firms. This is the beginning of a new era of transparency, in which information and decision-making is centralised, and external middlemen and lobbyists are marginalised. In such a scenario, all roads will lead to 7, Race Course Road, and business houses will be forced to line outside Modi’s office.
Alam Srinivas is Consulting Editor, Tehelka, and author of the book, Storms in the Sea Wind: Ambani versus Ambani.