Ahmedabad: The Narendra Modi government gave away 10% stake in a KG Basin gas field to GeoGlobal Resources, a company that existed only on paper. This has been alleged in a report published by the Tehelka newsmagazine on its website recently.
The Tehelka write-up, which quotes extensively from the CAG report on the deal between GeoGlobal and the state government-owned Gujarat State Petroleum Corporation (GSPC), says that the deal gave the Barbados company Rs20,000 crore, virtually for nothing.
The GSPC formed a consortium in March 2003 with GeoGlobal Resources India Inc and an Indian company named Jubilant Enpro Pvt Ltd, to bid for a gas block measuring approximately 4,57,000 acres in the Krishna-Godavari (KG) Basin. As per the Modi government’s own estimates, the gas field was worth about $20 billion (Rs 1,10,000 crore). Interestingly, GeoGlobal was incorporated in Barbados with $64 capital just six days before the formation of the consortium. Further, it was a one-man company as it was controlled effectively by just one person named Jean Paul Roy, a resident of Guatemala.
Tehelka has alleged that the Barbados-based company didn’t pay a single penny for the 10% stake given to it by the Gujarat government.
Even the company’s 10 percent share in exploration cost – which comes to around Rs2,000 crore — was borne by the GSPC. The Modi government had justified the deal on the ground that GeoGlobal was a technical expert and had helped the government in preparing the geological model for gas exploration. However, CAG had observed that the technical model prepared by GeoGlobal was so flawed that the GSPC had to hire another expert, Petrotel USA, at a cost of Rs 2.64 crore. And for the work done by Petrotel, GeoGlobal was given 10% state in the KG Basin, says Tehelka in its report.
The Modi government gave GeoGlobal 10% stake on the ground that the company had international experience in oil and gas exploration. However, in its disclosures before US authorities, the Barbados company had said that it had no exploration experience before venturing into India and the GSPC-led joint venture was its first oil and gas exploration work. The Tehelka report further alleges that the GSPC had agreed to pay GeoGlobal’s share of 10 percent to the fund set up for exploration activities. This money was to be recovered only after the JV began earning revenues from the sale of gas. The GSPC has reportedly spent around $3.069 billion (over Rs1600,000 crore) so far on exploration. GeoGlobal should have contributed $306.9 million (over Rs1600 crore) out of the total cost. But it is the taxpayers of Gujarat who have been made to fund GeoGlobal’s share of expenditure, says the Tehelka report.