Where Jaipal Reddy failed? Will Veerappa Moily make quick decisions?
Why Jaipal Reddy moved out of the from Petroleum Ministry?
No point blaming the corporate sector clout. We need quick and positive decision making and also drawing FDI in the sector in a big way! Let us be mature and take pragmatic decisions.
Reliance Industries'(RL) freedoms to operate the oil and gas exploration in a free and unrestricted manner was blocked by Mr.Reddy. The minister had his own reasons. But, finally, it was the lobby power of RL did the thing!
RL is known for its highly political pressure tactics, an old hand in this business, so the minister has paid the price. Reddy became the petroleum minister in Jan 2011.Today, he is out. Oil and gas exploration is a highly competitive area where the biggest players are all in action!
Yes, today’s politics in New Delhi is more weakened and the UPA-II needs more and reliable friends in high places! RL is a known high-power operator at the highest levels of the government. At all times. Not just now only!
Oil and natural gas industry in India is changing fast. Major players from Italy, Australia and UK and in India are not happy with the delays and restrictions and a peculiar bureaucratic behaviour. The ministry under a known doctrinaire minister was found to be obstructive and restrictive to large scale private players.
Everybody in New Delhi knew that Mr.Jaipal Reddy, a former socialist (we don’t know his present stances on many issues) must have been allergic to what RL was doing. It wanted to raise the price of gas. There is a steep decline in production. The once prolific KG D6 gas block off the AP coast also came under the scrutiny of CGA. The company resisted further intrusion into its activities. Reddy said no and that is why he paid the price!
Already, Mr.Reddy must have known the real problems. He must have taken a broader picture.
Foreign players were already facing the heat. They too resisted the bureaucratic hurdles, delays etc. There are reports some of the existing players like Shell and Vedanta are also unhappy with the ministry.
The minister had his own case too. Knowing that India imports 80 per cent of its crude oil needs, India spent 140 billion dollar bill on oil imports, up 40 per cent from the previous year. India missed its oil production targets in the 11th plan by 14 per cent.
Mr.Reddy must have managed the RL and other players. Whatever might have been case, he should not have created obstacles.
When it comes to the final word, the government (which everyone in Delhi knows is under the thumb of the big corporates and RL is the government’s biggest benefactor). So, Reddy was given the marching orders! By whom? Everyone also knows the person who must have taken such a decision!
Only those who know the ways and means of the big player knew that in matters of getting things done in New Delhi corridors of power there is no one to match the manipulative power of the RIL.
Even the Tatas, more so under the very-soon outgoing Ratan Tata burnt their fingers and got caught under the former telecom minister and also featured in the Radia tapes and got bruised so much. Even Radia quit her job as a lobbyist!
But RIL has much more experience in this game of pressurising the politicians and it is public knowledge how much the Indian state is a soft state and so when the time came for a cabinet reshuffle almost everyone was sure that Mr.Reddy will get the boot. Poor man he had no friends.
Yes, politics today has become so slippery a path that whatever you got as by way of belief or values or commitment to some well-defined ideology, you have no chance in today’s Sonia Gandhi type of politics.
Also, it is a fact that the crude oil industry is also undergoing some difficult times.
There are enough information and write-ups in the Indian press to show that the Indian bureaucracy is at its worst when it comes to understanding the high priority in oil and gas exploration sector and the need for quick decision making.
The so-called New Exploration licensing Policy (NELP) which ended state monopoly in oil and gas exploration, the policy was decided upon in 1997/98 to boost local exploration and production work, and also to attract foreign players, by all accounts seem to have not produced desired results.
In the context of some of the biggest names in the international oil and gas exploration sector, some like (1) the NEP didn’t succeed in its objective.
And see what is involved?
The last straw was Jaipal Reddy’s shortcomings for the delay in moving the RIL request forward.
What caused the final break?
Image Source : indiatoday.intoday.in