The GSPC jumla
With the spudding of a well in a block in the Krishna-Godavari (KG) basin recently, state-owned Oil and Natural Gas Corporation ( ONGC), the country’s biggest oil and gas producer, joined Reliance Industries Ltd and Gujarat State Petroleum Corporation (GSPC) to become the third major player attempting to produce from the tricky deep waters of the Bay of Bengal.
The KG basin is an extensive deltaic plain formed by two large east coast rivers, Krishna and Godavari, in Andhra Pradesh and the adjoining sea in which these rivers discharge their waters. According to the Directorate General of Hydrocarbons, the basin is a proven “petroliferous” continental margin with its on-land part covering 15,000 square kilometre (km) and the offshore part covering 25,000 square km.
The vast geological potential of the KG basin has, however, unmade many ambitious corporate claims, from both private companies and public sector units (PSU). Subir Ghosh’s book Grand Illusion: The GSPC Disaster and the Gujarat Model, examines the Gujarat-based PSU’s controversial KG basin journey.
GSPC, he points out, was essentially a gas trading company that ventured into exploration in the KG basin, once an exploration and production hotspot. To him, the Gujarat PSU took up what was one of Narendra Modi’s jumlas (fake promise) as Gujarat chief minister, and then created a big hole in its balance sheet after its failed attempts at an initial public offer.
The book begins by charting the journey of Mr Modi’s Gujarat Gaurav Yatra as chief minister. The prologue talks about how during the terrorist attack on the Akshardham temple in Gandhinagar in September 2002, the state government was engaged in increasing the net worth of GSPC in 48 hours so that it could meet the bidding criteria for the KG block in the auction under the New Exploration and Licensing Policy (NELP).
Mr Ghosh’s attempt to list out GSPC’s misdemeanours in the KG basin, despite a discovery in the KG-OSN-2001/3 block, heavily relies on the reports of the Comptroller and Auditor General (CAG) that were placed in the state Assembly. There isn’t much research from primary or secondary sources that such a work and topic would have warranted. At various places, he lifts directly from the CAG reports to bolster his theory that GSPC wilfully messed up its finances. For instance, the chapter titled “Cry of the Wolf” quotes: “Against the estimated drilling cost of $102.23 million and the total depth committed of 45.348 metre in the minimum work programme, the actual drilling cost incurred was $1,302.88 million and the total depth drilled was of 77,395.07 metre.”
Besides GSPC’s debt and huge expenditure in the KG exploration venture, Mr Ghosh also goes into the alleged favours granted to GeoGlobal Resources by way of 10 per cent participating interest in the block in return for technical advice from one Jean Paul Roy, a Canadian geologist. Later, Mr Roy fell out with GSPC after the company deviated from its planned development programme. Mr Ghosh, however, casts doubts on the news report about the falling out by questioning the Economic Times reporter’s subsequent career moves and contrasting it with that of Ashish Khetan who reported on the GeoGlobal controversy in Tehelka magazine and later joined the Aam Aadmi Party, which raked up the issue at the political level.
As with Mr Ghosh’s earlier coauthored work Gas Wars, Grand Illusion is all over the place with the writer losing focus in some chapters that criticise the Hydrocarbon Exploration and Licensing Policy that has replaced NELP and subsequently even the appointment of ONGC’s current chairman. Taking a dig at the National Democratic Alliance government’s Ease of Doing Business theme, a chapter “The Ease of Luring Business” begins with the Tata Nano project being relocated from West Bengal to Gujarat and Mr Modi’s run-ins with the American government on granting him a visa and the famous Confederation of Indian Industry summit that criticised the 2002 Gujarat riots. The only common string among these issues is Mr Modi and his Vibrant Gujarat theme.
Though Mr Ghosh has chosen a contemporary topic that had seen limited debate in the print media and had been completely blanked out by the electronic media, his work could have been enriched had he also gone into greater detail about the KG basin, its technical aspects, and the manner in which ONGC was forced to buy the GSPC block in 2017. Interviews with oil sector professionals, investor activists who criticised the GSPCONGC deal, and even journalists who have long tracked GSPC were some of the basic techniques that could have enriched his writing. His sole reliance on CAG reports and disparaging news items have not been able to make up for the lack of detailing, especially on the financial irregularities in GSPC’s functioning. To his credit, however, Mr Ghosh has put together all you need to know about GSPC in the context of Mr Modi’s rise from chief minister to prime minister.
GRAND ILLUSION: THE GSPC DISASTER AND THE GUJARAT MODEL
Subir Ghosh Authors UPFRONT 233 pages; ~395