Prakash Karat's strange silence

Like Sherlock Holmes’ dog that didn’t bark, the silence of the communists on things that really matter (PSUs getting shafted by ministers and bureaucrats) is getting curiouser by the day.

Around seven months ago, the ministry of petroleum issued a Presidential Directive (the only other time a PSU got a direct order from the President of India was on reservation of jobs for the underprivileged) to Gail, asking it to scrap its tender for buying LSAW pipes for its Dahej-Uran pipeline and consider buying HSAW pipes—this, despite the fact that most pipelines globally, as well as in India (such as the 1,700-km HBJ and its 515-km expansion), use LSAW because consultants say it is more rugged.

While no one seriously expected Prime Minister Manmohan Singh to be able to prevail upon Mani Shankar Aiyar, who’s such a favourite of Sonia Gandhi after his impassioned pleading asking her to reconsider the great renunciation, it was expected that the honourable Mr Karat, who’s constantly claiming he’s protecting PSUs from pillage, would come to Gail’s rescue, but clearly he feels it’s okay to delay PSU projects and only sacrilege to either sell PSUs or divest some part of their equity.

While the Dahej-Uran project has already been delayed by over 16 months, it is interesting to keep in mind the project is in direct competition with Reliance’s gas from its latest finds—another six to eight months more of delay, and someone is certain to say there’s no point Gail building the pipeline, why not just wait for Reliance’s pipeline to come up! Curiously, even Sharad Pawar didn’t take up the matter despite knowing the pipeline would have alleviated Maharashtra’s power crisis since it was supposed to supply large quantities of gas to Tata Power.

What’s even more shocking than the Presidential Directive are the events after Gail floated a new tender in November, which allowed even HSAW pipe-producers to bid. The firm which argued with the ministry that HSAW pipes should also be considered instead of just LSAW ones, a Mumbai-based one called PSL, could not bid under the new tender since it was on the “holiday” list of Gail, a list of firms whose work is considered sub-standard, and are therefore not eligible to bid for fresh contracts during this “holiday” period.

After the bids for the revised tender were received, the government directors asked Gail’s management to reconsider the “holiday” of PSL (a board sub-committee was set up and said the holiday was justified) as well as that of the other 15 firms on the list—all this took several months, during which time even the revised tender lapsed! The “holiday” period got over on June 7, so Gail will probably float (yet) another tender in another month or so.

Since no one’s taken this up with the ministry, it felt emboldened to delay even other purchases. In the case of the 140-km Thulendi-Phulpur pipeline (maybe Sonia Gandhi doesn’t know this is also supposed to supply gas to Rae Bareilly!) and the 190-km Bijaipur-Kota pipeline projects, where Gail asked for pre-coated pipes since this saves time as well as costs, the government wants to know why Gail can’t go in for uncoated pipes and coat them itself!

Simple management decisions are being brought to the board, and the government directors then do their bidding and stall projects. In this case, the ministry’s letter on the matter reads “I am directed to enclose herewith a letter dated 30.3.2005 alongwith (sic) the enclosures, received from M/s PSL Ltd. on the above subject (the Thulendi-Phulpur tender) and to request that the matter maybe (sic) placed in the GAIL Board in its next meeting for consideration.”

This case is currently pending with the CVC’s office since Gail had opened the price bids and cancelling the tender will lead to court cases and, more important, if the next bid is higher, there will almost certainly be corruption allegations.

The ONGC case is even more interesting. While the government refuses to allow the company to set up joint ventures for establishing a chain of petrol pumps as well as to outsource its massive need for marine services including helicopters (why should an exploration and production firm be running helicopter services anyway?), a running battle is being fought on the issue of government directors.

ONGC is already under threat of getting delisted from the stock exchanges since it has too many government directors, and the government now wants to put the Director General of Hydrocarbons on the board.

When it was pointed out that this was a conflict of interest since the DGH is a statutory regulator and sits in judgement on ONGC in other areas (such as when ONGC submits cost claims to him), the ministry came up with a real howler and said the DGH was not a statutory regulator but did regulatory functions among others! And clearly no one in the ministry has read the department of public enterprise guidelines that say the maximum number of government directors on any PSU board is two (if the government has its way, ONGC will have five government directors).

There is also a huge fight between ONGC and the ministry on the proposed Rs 25,000 crore investment in Karnataka, for which ONGC signed an MoU with the Karnataka government last August. Last heard, T K Nair, the secretary in the PMO, held meetings with the Karnataka government (which is very upset that the investment is being scuttled), the ministry of petroleum, and ONGC, to try and sort out matters.

Postscript: Aiyar of course has the best of both worlds. While he makes life miserable for PSUs under his charge, Indian Oil Corporation and Gail have footed the bill for the huge journalist entourage accompanying him and diligently reporting his every statement during the ongoing multi-nation expedition