Suhaib Ilyasi: The curious case of missing file ID No. 87360 at Indian Gas major, GAIL

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In most of the big PSU corruption cases inquiries are instituted for the sake of formality. Small-time officials are made sacrificial goats whereas the big fishes are allowed to slip and go scot-free. Similarly it is alleged to have happened in the country’s gas major, GAIL India Ltd. The crucial file No. 87360 which has decisive and essential evidence of alleged connivance of top management officers in the crime is missing. The CBI in its preliminary enquiry report conveniently ignores the role of the senior management of the company and instead small officials and private companies have been made accused in the corruption case.

Bureaucracy Today known for the unbiased and fearless brand of journalism brings to its readers an in-depth and shocking report of alleged corruption in the Government-owned Gas Authority of India Ltd (GAIL)

The missing file

A File ID No. 87360 that was supposed to contain all the crucial information and evidence of involvement of Board-level GAIL officials in the alleged Rs 246.16 crore scam has gone missing from Gail office records. The GAIL in its RTI reply to Bureaucracy Today, dated November 26, 2013 acknowledged; “It is hereby submitted that the file containing desired inputs (having file ID as 87360) was not closed in the Pricing Department, hence it is not available. The same is also evident from the file Movement System report enclosed with the letter.”

A source on condition of anonymity informs Bureaucracy Today that “the file had gone missing from the database of the GAIL. The file was last tracked on July 25, 2006 when it was sent by EVS Rao, then (GM Pricing), to then Chairman and Managing Director UD Choubey at 12.18 pm. Later on November 1, 2006, as per record, the file is said to have been closed by Choubey”.

“Why are you so interested about the file movement? It’s our internal matter. Who gave you the information about this file?,” reacted SB Mitra, GM (Law), GAIL India, when the Bureaucracy Today reporter visited the GAIL headquarters in New Delhi to inquire about file No. 87360 which is related to pricing and the alleged favouring of six private parties by the GAIL.

Alleged corruption and its background

The case of alleged corruption pertains to extending an undue benefit of Rs 246 crore to six private power producers by supplying them cheap gas by GAIL India. The private players subsequently sold electricity at commercial rates against the Oil Ministry’s instructions.

Shockingly the top management of the GAIL in 2010 further entered into fresh agreements with the same companies without resolving the pending pricing issue, despite the crucial ongoing controversy of pricing since 2006. Astonishingly the CBI’s investigations and its Preliminary Enquiry (PE) are dead silent on this critical matter.

In the year 2000, six private companies, namely M/s MMS Steel, Saheli Export, Kaveri Gas, Coromandal Electric, Arkay Energy and OPG Energy entered into separate agreements with the GAIL. The public sector undertaking agreed to supply to the above mentioned private companies a fixed quantity of gas, as allotted by the Government of India. The period of validity of the agreements was fixed as December 31, 2010, though in individual cases, there were some variations.

The agreements provided for the extension of the period of contract. Insofar as the price of gas was concerned, Article 10 of the agreements stipulated that up to March 31, 2000, the price as fixed by the Government of India under a Pricing Order dated 18.9.1997 would be adopted. And after 31.3.2000, the GAIL reserved the right to fix the price as per the directives, instructions or orders of the Government of India. It was also stated in the agreement that the price was likely to be market related in accordance with the current policy of liberalization of the Government.

In other words, the quantity of gas to be supplied to each of the applicants was determined by the Government of India, by individual letters of allotment; and the price payable by the applicants was to be in accordance with the pricing orders issued by the Government from time to time. From the time the six private parties entered into gas supply contracts with the GAIl, till the year 2005, there were no issues. But, on June 20, 2005, the Government issued a Pricing Order bearing No.L-12015/5/-4-GP, revising the pricing methodology that was in force from September 18, 1997.

The decisions communicated by the Pricing Order dated 20.6.2005, which are pertinent for this Bureaucracy Today investigative report, are as follows: “Power and fertilizer sectors are critical to the economic development of the country and the output price of these sectors is either controlled or regulated by the Central and State Governments, who have to bear subsidy to a large extent for any increase in the output price. The specific end users committed under Court Orders/small scale consumers having allocations up to 0.05 MMSCMD also deserve priority in gas supply. Accordingly, it has been decided in the public interest that all available APM gas would be supplied to only the power and fertilizer sector consumers against their existing allocations along with the specific end users committed under Court orders/small scale consumers having allocations up to 0.05 MMSCMD at the revised price of Rs.3200/MSCM. This price would be linked to a calorific value of Rs.10,000 K.cal/cubic metre. Consumers other than fertiliser, power and specific end users committed under Court Orders/small scale consumers having allocations up to 0.05 MMSCMD and getting existing gas supplies through GAIL network, would be supplied natural gas at market related price depending on the producer price being paid to joint venture and private operators at landfall point, subject to a ceiling of ex-Dahaj RLNG (regassified LNG) price of US$3.86/MMBTU for the current year i.e. 2005-06”.

Two Pricing Mechanisms

It may be noted from the relevant portion of the Pricing Order dated 20.6.2005 extracted above, that two different pricing mechanisms were adopted. One was termed APM meaning ‘Administered Price Mechanism’.

The second was market-related price, which depended upon the producer price being paid to joint venture and private operators at landfall point. By virtue of Clause 10 of the gas supply contracts that the parties had entered into, it is obvious that the Pricing Order dated 20.6.2005 was to come into effect. By a letter dated 5.6.2006, the Government of India also sent a communication to the private parties indicating that as per the Pricing Order dated 20.6.2005, a revision of APM gas prices was to be carried out for all consumers, other than those in the power and fertiliser sectors, in a phased manner over the next three-five years. Accordingly, the Government increased the price of APM gas supplied to City Gas Distribution Projects and small consumers having an allocation of up to 0.05 MMSCMD, by 20% over the current APM price of Rs.3,200/MSCM for general consumers and Rs.1,920/MSCM for North-East consumers. The revised prices for other consumers were also indicated in the said letter. Thereafter, the GAIL sought a clarification from the Director in the Ministry of Petroleum and Natural Gas, by letters dated 5.6.2006 and 12.6.2006.

By Shalini Singh, New Delhi

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UP Elections: Expect the unexpected

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Ring in the old, ring in the new… It is a pacy beginning to 2012 with five states–Punjab, Manipur, Goa, Uttarakhand and Uttar Pradesh–going to the polls in the first quarter. It has been interesting to watch political alignments and shifts and methods of wooing voters, especially in the most populous state, Uttar Pradesh.  Keeping with the times, politicians have started using the social media to give their message to the voters. Facebook and Twitter are flooded with messages. As always there have been lavish promises of job quotas, loan waivers and development to entice the elector.

Also interesting has been a change in the political scenario in UP. Like a lot of corporate and royal families, politics has become an heirloom, passed from generation to generation.  In this changing landscape, we saw the Yadav scion, Akhilesh, pushing his Samajwadi Party workers to defeat the Dalit queen, Mayawati. The Gandhi brother-sister duo, Rahul and Priyanka, once again came together to strengthen the Congress base in the State. And a storm blew up in the BJP when Pankaj, son of senior BJP leader and former Chief Minister of UP Rajnath Singh, was promoted as the seventh general secretary of the UP unit of the party. Amongst the major party leaders, only Chief Minister Mayawati has not added an heir to this political whirlwind. Her party has probably not sensed the public mood and shown a young face or used the social media extensively to attract the voter.

Traditionally the road to Delhi has been through UP and the 2012 Assembly poll in the State is not going to be any different. Observers say a lot is being prepared for Lok Sabha elections 2014. If the Congress manages to get a stronger vote bank, it may help establish the credentials of the suave Gandhi and make him a stronger prime ministerial candidate and head of the party. Early UP elections may increase the chance for the Congress adding to its tally in the Rajya Sabha and the BSP remaining status quo or even getting less. If the SP gains political power, the Yadavs will once again establish their reign in UP. Rajnath Singh is back in the ring with his offer of socio-economic progress to all, irrespective of their caste, creed and colour.

Like Bihar, the results of battleground UP may be decided by the minorities, especially the crucial Muslim voter. As the Congress and smaller outfits like the Peace Party gain ground, alliances could be in the offing. But there might be a surprise from the sidelined BJP. This surprise factor came out in a poll conducted on this magazine’s website www.bureaucracytoday.com. The poll was to know how the participants were responding to a mood for change in government. The choice was between the BSP, SP, Congress and BJP. At the beginning of January, the visitors preferred the current BSP regime. As the month progressed, the SP went to the number one position and the BJP was edging closer to the Congress. By month-end, the BJP came to the third position and was close on the heels of the BSP, leaving the Congress at the bottom. The gap between the BJP and the BSP became narrower, with the former getting 22.99 per cent response and the latter 26.44 per cent.

So who will be the next CM of UP? Expect the unexpected as the gates to the UP arena open this February.

By Suhaib Ilyasi

Bureaucracy Today

Why not Independent Directors in time?

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India is today proud to have many public sector companies that have high quality managements and can give any private companies in the same industry segment a run for their money. The NTPC, BHEL, ONGC, IOC, BPCL and GAIL are some such examples, having excelled in their businesses despite being hamstrung by government interference and influence in their decision making. The Central Government’s apathy and casual approach towards these companies are once again visible, this time on the critical issue of composition of the board of directors which presides over the efficient management and future of any company.

The role of Independent Directors on the board of a public sector undertaking (PSU) assumes even greater significance in view of the Government’s interference in the functioning of these companies. Independent Directors can act as a counter influence and balancing factor in the interest of the company. But it is an irony that the role of the Search Committee which recommends the names of Independent Directors for public sector companies itself is under a cloud. The recent appointment of some Independent Directors with questionable credentials has raised a big question mark on the process of selection by the Search Committee. At the same time, major PSUs waiting to launch their IPOs and FPOs are waiting for appointment of Independent Directors. The role of the Department of Public Enterprises is also

debatable. PSUs urgently need fresh capital to face increasing competition, a tough business environment and a tight liquidity scenario. Disinvestment is one way which not only ensures an inflow of capital but also brings in more efficiency and transparency. But PSUs like the BHEL, ONGC and RINL are unable to raise capital through IPOs/FPOs because they are short of Independent Directors and are thus not eligible to tap the capital market under the guidelines mandated by market regulator SEBI. It is indeed intriguing that the Government fails to appoint Independent Directors in time even when they are appointed for a fixed tenure and thus the Government knows well in advance when a particular Director will retire.

The Government needs to pull up its socks. Independent Directors should not only be appointed as soon as a vacancy is created but those who make the cut should be of impeccable credibility and track record. With this issue, Bureaucracy Today is introducing a new column for the aspiring bureaucrats. Senior bureaucrats will share their experiences, explain how they cleared the UPSC exams and will give insights into how the candidates who have cleared the mains should handle the interview. We hope aspiring bureaucrats will get invaluable guidance through this column.

Suhaib Ilyasi

J Bhagwati, IFS is all set to be India’s next envoy to London

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The jockeying for India House, the seat of the Indian high commission in London, seems to be over with the government apparently zeroing in on J Bhagwati, India’s current envoy to Brussels.

Bhagwati, who has been India’s ambassador to Belgium, Luxembourg and to the European Union for over three years, has an impressive and varied resume that includes stints in the finance ministry and in the World Bank.

A 1976 batch officer of the Indian Foreign Service, Bhagwati served as additional secretary in the external affairs ministry and boasts of extensive experience in financial and economic matters with specialisation in capital markets.

The lobbying for India House had moved into top gear after Nalin Surie stepped down as India’s high commissioner July 31 and retired from the foreign service. He was offered a six-month extension but he declined.

Since then, many senior diplomats were eyeing the prized London posting — including Pavan K Varma, currently India’s ambassador to Bhutan and a former director general of the Indian Council for Cultural Relations (ICCR), and Sujatha Singh, India’s high commissioner to Australia.

However, after a careful review, the government has now chosen Bhagwati as the successor to Surie in India House, highly placed sources said.

With Bhagwati’s appointment near certain, the stage has been set for other key high-profile diplomatic appointments.

There are no announcements yet, but there is speculation that Navtej Sarna, India’s envoy to Israel, may become ambassador in either Dhaka or Thimphu.

Pankaj Saran, currently joint secretary in the PMO, is also keen on an ambassadorial posting in Bhutan.

Sujatha Singh is expected to take charge in Berlin. It’s not clear who will succeed her in Canberra but the name of Biren Nanda, India’s envoy to Indonesia, is doing the rounds.

Gurjit Singh, additional secretary in charge of East and South Africa in the external affairs ministry, is heading to Indonesia as ambassador.

Vishnu Prakash, the spokesperson of the external affairs ministry, is expected to go to Seoul as India’s ambassador.

Syed Akbaruddin, a senior diplomat who was in Vienna with the International Atomic Energy Agency, is likely to succeed Prakash as the public face of India’s foreign office.

But the sources said that last minutes changes in the appointments could not be ruled out.

suhaib Ilyasi, Bureaucracy Today

The plaguing negativism in Indian bureaucracy

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The plaguing negativism in Indian bureaucracy Is India developing on the pretext of being a conformist nation denying to break through the established standards of conduct?Are we a nation which is dreaded of taking bold decisions? At least this is what is visible if we look at the current state of affairs as far as the bureaucracy is concerned.The aftermath of this phenomenon may not be strikingly visible today but it will have its effects on the surface after two years from now. Public sector Chairmen and Managing Directors seem to be vary of taking bold decisions on important business deals thus hampering the growth of their undertakings and lack a go-getters attitude which is necessary for all the PSUs to take that leap to expand their business offshore. Bureaucrats are dithering to move files with key financial implications
and are dreading a future quandary which may put their career growth at stake. The caution continues with ministers as well. It is true that those guilty of jumping the formidable line for personal gains should be taken to task but it is equally unfair to paint every bureaucrat with the same brush. The result of which is that hardly any bureaucrat is audacious enough to resolve the stalemate in any of the key matters. Suhel Seth in his column rightly points out, “It is not about the deed. It is always about the intent.” Even the self-proclaimed crusaders against corruption are not untouched by controversies over their personal gains. Kiran Bedi has been rightly pointed out as one such example by many in the media and governance.

However, the negativism among fellow bureaucrats is something that the newly appointed Principal Secretary to the Prime Minister, Pulok Chatterji, has to deal with. While former Cabinet Secretary KM Chandrasekhar was known for his fire-brand capability of taking decisions under tight circumstances, it is to be seen how his successor, AK Seth,manages the billet and the task of encouraging bureaucrats to emerge from the current hysteria. In this context, we should note a contrast in Karnataka where former Chief Minister Yeddyurappa was saving his face by protecting some of his shady Cabinet Ministers but a bureaucrat was dutifully obeying the Supreme Court orders of a ban on mining activity in Bellary. Deputy Commissioner Amlan Aditya Biswas, IAS, seized trucks carrying 9,000 metric tonnes of iron ore to the “(in)famous” Reddy brothers’ corporation. Even when the people in power were trying to bamboozle his tenure in Bellary Biswas’s courage made the apex court put a ban on his transfer or posting to another district. Meet this month’s Bureaucrat of the month for his courage and dutifulness, a trait every young bureaucrat must take a cue from.

Haryana govt transfers 14 IAS, 31 senior IPS

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In a major administrative reshuffle, the Haryana government on October 28 transferred 14 IAS and 31 senior police officers, including 27 IPS.

The 14 IAS officers includes Deputy Commissioners of nine districts.

Ram Niwas, awaiting order of posting, has been posted as Financial Commissioner and Principal Secretary Development and Panchayats Department. Jhajjar DC Chander Parkash has been posted as Secretary, Haryana Board of School Education, Bhiwani in place of Shekhar Vidyarthi, who is the new Deputy Commissioner of Yamunanagar in place of Sameer Pal Srow.

Bhiwani DC CR Rana becomes Special Secretary to Health Department and Mission Director, NRHM and Commissioner of Food and Drugs Administration in place of Rakesh Gupta, who becomes Deputy Commissioner, Faridabad.

Kaithal DC Amneet P Kumar will be new HUDA Administrator, Faridabad vice Ajit Balaji Joshi will be the new Jhajjar DC. The transferred police officers include IGPs of Karnal, Rohtak and Hisar Range and SPs of Rewari, Hisar, Faridabad and Gurgaon.

War on the waves: IIS vs IAS

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A demotivated and disheartened manpower can bring the mightiest of the organizations down. Similar is the case with the organizations manned by Indian Information Service (IIS) officers. In spite of being inducted by the UPSC the credence given to this particular civil service cadre is hardly visible. The issues such as stagnation of IIS officers and inattentive cadre management by the Ministry have led to high attrition rates. It seems the Government of India is sleeping over the sweeping changes taking place in the media world.

It was at least a decade ago when the Expenditure Reforms Commission, constituted in 2000, had shown red flags to most of the media units under the Ministry of Information & Broadcasting. The Commission, chaired by former Finance Secretary KP Geethakrishnan, categorically suggested either closure or disinvestment of most of the media units. We are at loss to understand why did not the Commission put its finger on the real cause of the poor state of affairs in government managed media organizations i.e. the low morale of IIS officers. The commission should have recommended reforms rather than suggesting their closure or disinvestment Even when Bureaucracy Today was talking to IIS officers on the issue, members of another service under the controlling authority of I & B Ministry, Indian Broadcasting Service, echoed the same sentiments which, to our utter shock, are even worse than those of IIS officers who have been waiting for promotion for 28 years. Since 1964 the IIS has seen only three cadre reviews. It seems the Ministry is having hard time managing cadres under it. The non-performance of media unit can be attributed to an extent to the discouraging prospects that IIS officers face during their career which gets translated into overlapping of functions. Whether Government communication schemes reach the target audience is debatable.

Can the Ministry explain to the nation the rationale behind IAS preference for post of DG, Doordarshan? An IAS officer is indeed a great administrator but not necessarily trained to understand and execute the finer nuances of programming and broadcasting. I am told by an officer in Doordarshan that most of the time, IAS bosses fail to take a call on crucial issues pending on their table. By the time an IAS officer gets trained to handle peculiar issues of broadcasting he is sent out to do other great things in the Government. This is exactly the reason of poor performance of Doordarshan, he revealed. The damage is visible. When the world is waiting for India to make its presence feel in world organizations, the Indian Government is still grappling with fixing problems in its communication network and with its human resource. Former Principal DG S Narendra puts vital questions on the issue to Bureaucracy Today: “Can an IIS cadre review incorporate the philosophy of PSC as an inclusive growth instrument? Can it win support for retaining and strengthening the government media system, not as a despised publicity outfit but as a people’s instrument for greater access to PSC and participatory communication befitting a great democracy? India is lucky to have an effective Government media system; save it for people’s sake, not for saving the IIS alone. Let not a cadre review retain irrelevant units. Once retained they must restate their mission for enforcing accountability and embrace state-of-the-art media and communication technologies and practices.”

Are the stakeholders listening?

Suhaib Ilyasi