If Reliance was aware of the steep fall in gas production; it ought to have taken alternative steps to obtain the gas to cover the shortfall, and ensure its subsidiaries lay the pipelines on schedule, so that the country does not suffer
The supply position of gas from the D-6 block is precarious and Reliance Industries’ supplies has been unreliable in as much as the total production has come to a meagre 30 mmscmd (million metric standard cubic metres) as against the 80 mmscmd promised for delivery by this time.
British Petroleum (BP) chief Robert Dudley, however, has identified D-6 as the “golden block” of the Krishna-Godavari (KG) basin and only as recently as February this year, BP had bought 30% stake in the oil and gas owned by Reliance at $7.2 billion. This deal includes the gas fields in the KG basin.
According to the information available, the block currently produces 1.16 billion cubic feet of gas per day from 350 sq km out of the total 7,500 sq km area. There are several other discoveries within the block, where the price has been fixed at $4.20 per mmBtu (million metric British thermal unit), and which is likely to reviewed in April 2014. Dudley is optimistic that this price structure will have to change in relation to the imported spot price, which is currently around $16. This is likely to go up rather than down, but, in any case, is much higher than the un-remunerative contracted price of $4.20 per mmBtu which is valid till April 2014.
Only recently, it may be recalled, that the KG-D6 Management Committee had approved the capital expenditure of $1.06 billion for 2012-13.
In a relative development in the KG block, it looks likely that ONGC may be able to secure Japanese involvement in its search for oil and gas. However, it has declined to identify the exact location or their prospective partner in the proposed exploration.
In this case, although the Director General of Hydrocarbons has accepted the availability of in-place gas reserves, the estimates made by ONGC (at 4.257 trillion cubic feet) varies widely to 3.988 tcf. Despite the above variation in estimates, DGH has assessed that actual recovery factor may be in the region of 2.315 tcf, which remains to be seen.
Meanwhile, the Parliamentary panel has pulled up Reliance Gas Transportation for not laying down the cross-country gas pipelines on schedule. A total network of some 2000 km of pipeline was to be laid by Relogistics Infrastructure, a subsidiary of RGTIL. And, it appears the main reason for the delay in completing the pipelines has been the contention that there is “insufficient gas to feed” these lines.
While it is true that due to declining production of gas from the KG basin, had the pipelines been operative, there would have been no gas to pump out and distribute. This project was cleared in 2007-08 but regrettably four years later, we have hardly scratched the surface!
One does not know even if the land has been acquired for the purpose and the required formalities completed in terms of compensation for the affected landowners, and their rehabilitation, if and where necessary
The biggest worry now should be that, if and when this matter is reviewed, there are 100% chances for price escalation clauses to become applicable and the whole project cost would balloon in terms of current cost of pipes versus future costs due to increased raw material cost factors.
Therefore, it is a pity we are back to square one on the issue. In fact, one may rightfully argue that if Reliance was aware of the steep fall in production of gas; they ought to have taken alternative steps and measures and the foresight to initiate purchase agreements to obtain the gas to cover the shortfall, and ensure their subsidiaries lay the pipelines on schedule, so that the country does not suffer. And, of course, their marketing arm could have renegotiated the price for gas supplies, based on imports, with the consumers.
Under the circumstances not only should Reliance be penalised for this huge and irreparable loss, but government must review and reconsider if RGTIL's license should be cancelled?
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)
This is a subject Moneylife has written on many times in the past. It now appears that RBI has finally taken some steps. It is now up to you as a consumer to ensure that your bank/branch/ATM is subscribing to those RBI directives
The Reserve Bank of India (RBI), to its credit, has one of the best online adherences to the Right to Information (RTI) Act of India. Much of what you want to know has already been proactively declared, and existing circulars as well as guidelines are neatly arranged as well as very searchable. They also tend to be clubbed together by subject once or twice a year on the 1st of July and sometimes also on the 1st of January. The central bank is also very prompt in acknowledging and responding to RTI applications. Most of all, unlike certain other public authorities, the RBI tends not get stuck on technicalities like demanding small amounts of money for photocopying charges—especially when the postage used for said demands is more than the demand.
(The ministry of railways, for example, has been known to spend Rs35 on SpeedPost charges to make a demand of Rs2 for photocopying a one-page response.)
So it is amply clear that when answers to specific questions are not available from the RBI that something is really amiss. And that's exactly what happened with queries put to the RBI by this correspondent on the subject of accountabilities as well as guidelines in context with currency notes issued through ATMs operated by independent companies and other sub-contractors for banks and soon to be operated by non-banks too. As readers may be aware, more and more banks are sub-contracting the ‘business’ of operating ATMs to outside companies, and this is where the grey area lies.
Because, simply put, the RBI has issued fairly explicit guidelines to the banks on issue of currency notes. However, it is amply clear that there is a missing link between the banks and the various agencies involved in maintaining, stuffing and operating the ATMs. To put it in simple terms—there is no public document or guideline from the RBI to the banks or the banks to the ATM operating sub-contractors on what precautions need to be taken for currency notes dispensed from ATMs which are maintained by outside sub-contractors. To a point where there is no clarity or accountability now even on an ATM which is on-site at a bank’s own premises—since it is totally maintained and operated by an outside vendor.
This is the position as per RBI, in its response...
# RBI’s directive under Section 35A of the Banking Regulation Act, 1949, along with Circular DCM Cir.NPD.3161/09.39.00 dated 19 November 2009 makes it imperative for all scheduled banks that currency in denominations of over Rs100 should be re-issued by banks over their counters or through ATMs only if these banknotes are duly checked for authenticity/genuineness and fitness by machines.
# Further, in para 127 of the Monetary Policy statement 2012-13, banks have to ensure that currency notes of all sorts received over the counter are re-circulated only after their proper authentication through machines, and to streamline their system in a manner which will make them bear the risk of counterfeit bank notes rather than the common man. Guidelines as per DCM’s circular No. 5063/16.02.22/2011-12 dated 9 May 2012.
# There is no guideline from the RBI to the common man on what she is supposed to do if presented with a counterfeit currency note from an ATM or teller. However, there is a Master Circular DCM (FNVD) No G-5/16.01.05/2012-13 dated 2 July 2012, which is trickily worded. In as much as it uses the term “counterfeit currency tendered” to apply—so, in effect, once an ATM (or teller) has dispensed a fake currency note, any return of the same currency note by the customer even to the same bank is viewed as ‘tendering’ fake currency. A long and convoluted police reporting process follows—in which it appears that the main suspect will be the customer or said common man.
So what can the “common man” do in this case?
There is a small window of safety for the customer/”common man” vide para 6 of Master Circular 2012-13 on “Detection and impounding of counterfeit notes”. It is now imperative and mandatory on the part of all banks irrespective of volume of daily cash receipt, to provide the facility of machine processing—and not to put currency notes back into re-circulation without this. Not doing this is in violation of Directive No 3158/09.39.00 (Policy). / 2009-20 dated 19 November 2009. This applies to currency notes dispensed through both teller as well as ATM.
Towards this, the RBI has issued guidelines on “Note Authentication and Fitness Sorting Parameters” in May 2010, which make it contingent on the bank/branch to provide at least one counting machine (with dual display) for public use and all banks/branches to be equipped with ultra-violet lamps or other appropriate banknote sorting / detection equipments.
Read together, this means that at least for on-site ATMs, a customer should have the facility to check currency notes before accepting them.
In addition, if you are using ATMs which are off-site (or even on-site) then it is incumbent on the bank/branch under which said ATM operates to ensure that only those currency notes which have been machine sorted are put back into circulation, and issued to customers. This is vide DCM (FNV) No. 5063/16.02.22/2011-12 dated as recently as 9 May 2012. The responsibility even for an off-site ATM and certainly for an on-site ATM lies totally with the branch.
To the best of my knowledge, and after visiting four PSU bank branches and two private bank branches close to where I live, none of the branch managers or accountants had the faintest clue of what I was talking about when I quoted and showed them this circular. According to them—the responsibility was totally on the sub-contractor who stuffed the ATM. Their role was largely all about indicating when the ATM ran out of money or stopped working. Everything else, including authenticity of the currency, was the responsibility of the un-named sub-contractor.
Where I live, which is South Delhi, that means three or four grungy looking men in a decrepit van, plodding along with money carried in black steel trunks, pulling down the shutter of the ATM and doing whatever they feel like inside. The inside of the room where the ATM vests looks like a small dhaba, also used by all sorts of people to rest in, sit in and generally do what they want—since it is air-conditioned. To put it bluntly, it comes down to the fact that we rely on sub-contracted staff from a bank’s sub-contractor for keeping our currency honest.
To sum it up, you have to ask your bank branch manager or the manager of the branch which holds responsibility for the ATM you use, whether the ATMs or tellers under their charge are in adherence with RBI’s circular DCM (FNV) No. 5063/16.02.22/2011-12 dated 9 May 2012. And if not, why not?
Good luck. And here's the relevant link:
(Veeresh Malik had a long career in the Merchant Navy, which he left in 1983. He has qualifications in ship-broking and chartering, loves to travel, and has been in print and electronic media for over two decades. After starting and selling a couple of companies, is now back to his first love—writing.)
It is difficult to see how Paul Ryan will appeal to the independent voter who is in the middle of the political spectrum rather than to the right. Mitt Romney’s decision is bold. The question is—is it wise?
It is a move to energize the base. It is a move to break out in the polls. It is a choice which recognises where the new power in the Republican Party lies. The choice of Paul Ryan, the “Darling of the Right” by Governor Mitt Romney to be his vice-presidential running mate is a move by Governor Romney away from his centrist roots to the right. It is the completion of the transformation of Governor Romney from the Massachusetts moderate to a full-blown conservative. As the Republican moderates have slowly disappeared and the middle of the Republican Party has fallen through. Governor Romney has decided to follow the Republican Party instead of getting the Republican Party to follow him and for that he has chosen Paul Ryan, the young dynamic ideologue, who is the chairman of the House Budget Committee and a thorn in President Obama’s side.
The young representative from the Midwestern state of Wisconsin (representing its first district) will immediately put the key swing state of Wisconsin and possibly the Midwest into play, goes the calculation. But more than that it is a recognition of who the boss in the Republican Party is and that is the right. The small town roots of Paul Ryan, he comes from the Jane’s town in Wisconsin, his amazing rise, his youth, his energy, will all help the Romney ticket to move on and there is already great enthusiasm as Romney and Ryan campaign together.
What got Paul Ryan onto the Republican ticket is undoubtedly his brain power and energy. He has been a foot soldier and a general for the right and the fact that he rose from the Republican ranks working among others with Jack Kemp who served as housing secretary in the administration of President George Bush and was the Republican Party’s nominee for vice-president in the 1996 election where he was the running mate of presidential nominee of Bob Dole. Further he has an appealing back story about life in a small town in Wisconsin, his resilience after his father’s premature death and his allergenic family. His interests are hunting, fishing and noodling (catching catfishes with his bare hand), which he said on CNN, was great fun which all make for an attractive story.
But he comes with a lot of baggage. His proposed budget is highly controversial with a lot of cutbacks and the choice of Paul Ryan enables President Obama and the Democrats to run against Congress, which is deeply unpopular as they can tie more closely to the Romney ticket.
The choice of Paul Ryan does nothing to bolster the Republican vote in two key constituencies where they are lagging behind the Democrats badly—women and minorities. Actually the choice of Paul Ryan is likely to make the female vote gap between the parties sharper as Paul Ryan is socially very conservative and believes that life begins at conception and opposes funding for contraception. This choice is likely to throw more women in the arms of the Democrats and it does nothing to strengthen the Republican Party’s appeal among the minorities and Hispanics who are a key voting block. The choice of Senator Marco Rubio of Florida would have possibly done both. It is particularly difficult to see how Paul Ryan will appeal to the independent voter who is in the middle of the political spectrum rather than to the right. Representative Paul Ryan is particularly known for the attitude on Medicare, the programme that provides health care for seniors, and Representative Ryan’s policies are going to frighten seniors. But what Paul Ryan will do is keep Governor Romney honest i.e. to the core beliefs of the Republican Party and sharpen the debate with the Democrats. They have dubbed themselves as the come back team. Indeed the trillion dollar deficit may take centre stage rather than the 8.2% unemployment rate as will trickle down economics.
David Axelrod, President Obama’s advisor, told Candy Crawly on the State of the Union programme of CNN that Mitt Romney was paying only 13.9% income tax and under Paul Ryan’s budget he would pay only 1% tax.
The debate has been sharpened and at stake is the direction in which America is headed.
Mitt Romney’s decision is bold. The question is—is it wise?