‘If ONGC finds it viable, it can work with GSPC… Are they India and Pakistan?’

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Published: May 29, 2016 7:55:23 AM

MoS, petroleum and natural gas, Dharmendra Pradhan talks about the challenge of delivering fuel to the grassroots level, stresses on the need to make LPG and kerosene subsidies more targeted, reflects on the BJP’s defeat in Bihar, and says Assam ‘voted for its aspirations’

Fifty per cent of the benefits (of reduced crude oil prices in the international market) have been passed on to the consumers, said Dharmendra Pradhan.Fifty per cent of the benefits (of reduced crude oil prices in the international market) have been passed on to the consumers, said Dharmendra Pradhan.

Why Dharmendra Pradhan: Son of former BJP MP Debendra Pradhan, Dharmendra Pradhan was inducted into the Modi Cabinet after delivering a victory for the BJP in Bihar in the 2014 general elections. Though he couldn’t manage the same feat in the Assembly elections, Pradhan has been a consistent performer as MoS, petroleum and natural gas. Freeing up diesel prices from administrative control, reduction in LPG subsidies and the Pradhan Mantri Ujjwala Yojana, for providing subsidised LPG connection to the poor, are the highlights of his tenure.

DHARMENDRA PRADHAN: Our ministry (petroleum), which has the primary responsibility of delivering clean domestic fuel, has done a good job in the last two years. It has penetrated to around 60% of the households. But delivering fuel to people at the grassroots level is still a challenge. To cater to that sector, we have introduced the Pradhan Mantri Ujjwala Yojana.

SHEELA BHATT: In your government’s tenure so far, international prices of crude oil and gas have been the lowest in history. But somehow the Indian consumer hasn’t reaped the benefits of that.

There is one question in the minds of people across the country: why hasn’t the consumer been given 100% benefit. That’s a model, I don’t dispute that. Let me talk about my difficulties. For the first time, the government bore the expenses of the BPL (Below Poverty Line) people, for whom paying Rs 2,500-4,000 for clean fuel was difficult. Isn’t it the responsibility of a welfare state to uphold the quality of life of poor people and protect their economic interest?

The second fact is that since the sharing formula of the 14th Finance Commission, whatever money comes to our (Centre’s) account in the form of tax, 42% of that is offered to the states. As part of the cooperative federalism model, shouldn’t our states be strengthened financially?  I said that we should offer 50% relief to people. But there was a danger. As you must have noticed that the (crude oil) prices have started rising. The gap should not be widened to such an extent that when there is spike, it pinches the people. Our research has revealed that many countries, both developed and developing, have adopted this model, but no one has passed on 100% (of the benefits).

SHEELA BHATT: So what per cent of the benefits have been passed on to the consumers?

Fifty per cent of the benefits (of reduced crude oil prices in the international market) have been passed on to the consumers. The remaining 50% has been saved and shared with the states. It has been spent on welfare activities.

SHEELA BHATT: In its report tabled before the Gujarat Assembly, the Comptroller and Auditor General (CAG) questioned the investments made by the Gujarat State Petroleum Corporation (GSPC).

Firstly, we want to congratulate GSPC for its contribution in the exploration (of gas) globally. There is 24% gas in the world energy basket, and India’s share is 7%. (Of this 7%) Gujarat has a 25% share. This shows the competence of GSPC. So, I want to thank GSPC that it participated in bidding under the NELP (New Exploration and Licensing Policy). It participated in the third round of bidding too. (CAG questioned GSPC’s investment of R19,576 crore in the Krishna Godavari block project, among other observations.)

According to the geological survey, of the five fields in high temperature-high pressure (HTHP) areas, GSPC has one field. These are very difficult fields. The nature of exploration (of oil and gas) is such that it has a 20-25% chance of success and till that time you will need to keep on spending. It is only when the production reaches the commercial phase that you start reaping the profits.

So, what went wrong with GSPC, why couldn’t they convert their spending into profitability? The UPA government at one stage took the pricing mechanism, which should have been market-driven and assured by PSC (Production Sharing Contract), into its own hands. They should not have done that. Those who are questioning the viability of the project today… you did not give them (GSPC) the basic freedom and rights in PSC.

After we came to power, in the new gas pricing formula that we have introduced, we have assured that we will bring in a different mechanism in deep and ultra-deep HTHP. The price mechanism that we have given now… there is a balance between cost of production and market price of GSPC.

SUNIL JAIN: But even your government delayed freeing up gas prices for nearly two years?

But today we have brought in good prices. There are so many stakeholders. We took one-and-a-half years, from October 2014 to March 2016, but we are bringing a futuristic model in the country and the world is appreciating the transparent model. There are bound to be some loose ends in policy-framing for such a big country. It can’t be knee-jerk.

SUNIL JAIN: You managed to control diesel prices. The ‘Give It Up’ LPG subsidy campaign also benefited many. But now will you put a cap, since that could be a problem once the crude oil prices rise? You could say for instance that you won’t let LPG subsidy go above Rs 150 or Rs 200 per cylinder when the prices rise.

Firstly, we won’t like to put any cap on LPG. We have set up a big model in a year; 10 million people have voluntarily given up LPG subsidy. Today, the LPG consumer base is of 16.70 crore people. Of this, 15.20 crore people are enjoying subsidy. So 1.5 crore people do not have subsidy. There should be a debate on the issue and a consensus should be formed.

Some time back we collected data of LPG consumers from four to five affluent areas in the country—south Delhi, south Mumbai, south Bengaluru, Salt Lake and some localities of Chennai. In these affluent areas, only 3% of the people had given up their subsidies. So it was then that the government decided that those who earn over R10 lakh or more a year should submit their affidavit while booking (LPG cylinders). We want to give LPG subsidy to the poor and make it more targeted.

AMITAV RANJAN: Can you tell us about the parliamentarians who enjoy LPG subsidy?

I can confidently say that almost 100% of the parliamentarians have given it up. The Congress’s Ashok Chavan, the Maharashtra party president, has given it up himself and has also made his MLAs and office-bearers give it up. Kharge saab (Mallikarjun Kharge, leader of the Congress party in the Lok Sabha) rang me up and said, ‘This is my consumer number, I want to give it up.’ 1.5 crore people have given it up—50 lakh people voluntarily and one crore after the PM’s appeal.

COOMI KAPOOR: You were in-charge of the Bihar Assembly elections. What lessons did you learn from the defeat? Do you plan to put some of the lessons to use in Uttar Pradesh next year?

In every election, whether you win or lose, you learn a number of things. Bihar, Assam, Kerala, Bengal and Tamil Nadu, they have all taught me many things. I was also working in Assam. There is no such thing as an in-charge. I cannot hide from my party’s defeat. In Bihar, people did not give us the mandate. The primary reason for that was that the traditional rivals there (RJD and JD-U), which were facing us separately in the Lok Sabha elections, united during the Assembly polls. Those who had earlier sworn against ‘jungle raj’ went and joined hands with the same people. They did not unite on any principle or an agenda for development, they united because of their fear of the BJP.

MANEESH CHHIBBER: Do you feel that if the Congress and AIUDF had come together in Assam, the results would have been different?

Even Muslim candidates of the BJP won in Assam. So Assam’s mandate shouldn’t be viewed in terms of minority and majority. Assam is a thinking society, it was outraged over an issue. And history bears witness to how the state’s aspirations were restricted. This time, Assam voted to fulfill its aspirations. And it was our good fortune that Sarbananda Sonowal led us in Assam. Don’t restrict the Assam results to (Badruddin) Ajmal or the Congress… Assam voted for its aspirations, it voted because it put faith in the Prime Minister, because it put faith in Sarbananda Sonowal.

MANEESH CHHIBBER: When Himanta Biswa Sarma left the Congress, his biggest grouse was that he had been at the number two position in the Assam Congress for years and couldn’t see himself becoming number one. How long do you think he can work as the number two man in your party?

Himanta will continue to be an asset for our party. He is a great organiser. The Sarbananda-Himanta duo is a reflection of Assam’s aspirations. Both are young and their strategy has been to unite various sections of Assam’s society. Both of them will work well.

LIZ MATHEW: Recently some BJD leaders had raised objections to the BJP’s attempts to appropriate the legacy of Biju Patnaik.

It needs to be understood that we are talking about national leaders here. Yes, they have some political opinions, ideologies, but they are larger-than-life figures. Especially after their death, he/she becomes a national property. So, someone cannot hold on to a legacy, saying, ‘this is my monopoly’, ‘this is my property’, one cannot say that. If we are trying to highlight their good work, is it a crime?

As far as Odisha is concerned, Biju Patnaik was a legendary personality who inspired Odisha. For a long time, Biju Patnaik was Odisha’s identity in national politics. He is not the property of any party.

Some people formed a party under his name… It’s a democracy, we don’t have any objection to that. The party (BJD) is in power there (in Odisha). But there are many people in that party today who were not with Biju babu. Is Biju babu only the ruling party’s monopoly?

Recently, a preparatory committee led by the home minister discussed a proposal to honour five great men in 2016—Biju babu is one of them.

LIZ MATHEW: Are you planning to move to Odisha state politics, the way Sonowal did?

My party is at the No. 3 position there (in Odisha). I am not under any illusion. My primary job is to make my party a relevant political force (in Odisha) or reach the No. 2 position. To be No. 1, one has to be No. 2 first. We are confident (of the BJP’s prospects in Odisha) in view of the new political climate developing in the state and the limitations of the ruling party after being in power for such a long time… It is a failed government. A political space is being created.

The primary task of a functionary like me is to make my party relevant and powerful there. In my party, I don’t take decisions. It’s up to the party to decide (if they want to send me to Odisha).

SIDDHARTHA P SAIKIA: Two years ago, you said that the oil industry and ONGC are not performing. After two years, production is still low, and even our gas production is dipping fast. Why is oil production down by almost 50% in the last two-three years?

I am constantly pursuing the objective of improving the performance of ONGC and Oil India Limited, the two E&P (Exploration & Production) companies of the government. There are many factors, they have to be understood. In the recent past, there has hardly been any exploration activity. When ONGC was the sole government company, it carried out all assessment and got nominations. A couple of days ago, I asked them (ONGC) what their per barrel cost of production was. What is the cost of production for small and medium E&P companies in the private sector?

What is per barrel production cost of other NOCs (National Oil Companies) across the world. ONGC is trying to improve on all that. ONGC has no shortcuts, they are on the job. The leadership there too has received certain things in legacy. ONGC has access to so much of technical manpower and government support, they have to perform. There is no shortcut.

SIDDHARTHA P SAIKIA: Is ONGC buying a stake in the GSPC block?

They are talking to each other. I don’t think there would be any anomaly if these two companies come together. Considering their geographical location, if there is co-development, production costs may come down. It’s a company-to-company decision. They are talking to each other. If it is viable to both sides, it will happen.

AMITAV RANJAN: You said that GSPC could not work properly because it did not get correct gas price. But, recently you made gas free in high-temperature, high-pressure (HTHP) areas. So now when GSPC will get the correct price, what is the need to hand it to ONGC?

If ONGC finds it viable, it will proceed. This sector in India has been treated very unfairly. Litigation, etc, have harmed this sector, harmed the poor of India. Which is the world’s best ultra-deep oilfield? It is in the Gulf of Mexico. There are some companies there that are fierce competitors in the market, but are working with joint infrastructure in the oilfield. If two exploration companies competing against each other can work together in the Gulf of Mexico and cut down their cost of production, why can’t it happen in India? At least, the cost of product will come down. Are they India and Pakistan?

SHEELA BHATT: For over 20 years we have been hearing that the Krishna Godavari Basin has so much gas that India will become energy-independent soon. Two years into office, can you tell us when will India become energy independent?

The geopolity of the world is changing. Our country’s production needs to go up. Apart from the KG Basin, of the 26 other sediments in our country, 11 are such where desirable data assessment is yet to be carried out. The country’s production will go up in the coming days, but its needs are growing too. As per the IEA’s (International Energy Agency) report, by 2040 our requirement will be threefold of what it is today. In 2014-15 and 2015-16, there has been a growth of 11%.

Due to India’s friendly ties and the credibility of its decisive leadership, and the way in which we are getting energy assets from abroad, it is reassuring in the long term. That apart, the biomass in the country, if we can blend 20 per cent of it, firstly, our import dependency will come down. Then our agri-waste, like straws of various kinds, are a waste. These are burnt.  Today, we have the technology to convert it to bio-diesel or ethanol. By using just 20% (of the biomass), we can add R1 lakh crore to the rural economy.

SHEELA BHATT: Reliance has invested in shale gas in the US. What is your government doing in this sector?

Reliance is our company. For investments outside the country, we don’t view government-owned and private companies separately. We help them all. As for shale gas, it is produced in high quantities in the US because the US has a lot of land.

SHEELA BHATT: Have there been any regrets in the past two years?

I will use two-three examples to explain this. In India, five lakh women die annually due to domestic pollution and smoke. One hour of domestic pollution is as harmful as smoking 400 cigarettes. These are not my facts, but the WHO’s (World Health Organisation). The LPG distribution network in the country has been functioning since 1955. Till 2014, when we came to power, there were 13 crore active LPG consumers in the country. In the past two years we have taken it to 16.70 crore. That means while 13 crore consumers were added in nearly 60 years, 3.70 crore were added in just two years. Over the next five years, we plan to identify five crore poor women who cannot buy LPG. The government will pay upfront so that they can have a stove and a cylinder. I regret that I could not speed up things any further. There is so much gap.

Transcribed by Koel Banerjee & Saikat Bose

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