Pradhan dismisses Congress’ charges on ONGC-GSPC deal

He was commenting on Ramesh’s demand for a judicial probe into Oil and Natural Gas Corp’s (ONGC) “sudden” decision to buy Gujarat State Petroleum Corp’s (GSPC) 80 per cent stake in KG Basin block for $1.2 billion.

“What is the basis on which he (Ramesh) is saying (that there was government pressure in ONGC agreeing to buy GSPC stake),” he said.

Ramesh, he said, perhaps was alluding to the “outside” pressures during the 10-year Congress rule.

“On what basis does he have to say that,” he said. “Have ONGC or oil companies not done (such) investments before? Is it doing for the first time? Is this the first merger and acquisition and they have not done any M&A or equity investment before,” he asked.

Pradhan sought to counter Ramesh by raking up ONGC Videsh Ltd’s USD 2.12 billion buyout of Russia-focused Imperial Energy Corp in 2009.

“What was the benchmark used for the acquisition? What was the internal rate of return (IRR) projected?” and have they been met, he asked.

Reserves of Imperial Energy appeared to have been inflated and unrealistic projections of output made to justify the Indian energy giant’s most expensive acquisition ever.

Pradhan said integration is the order of the day in the oil and gas industry with majors merging to ward off the challenge of low oil prices.

When Shell and BG can merge, why should Indian companies be far behind, he said. “Integrated company should be order of the day.”

GSPC had originally considered selling the Deen Dayal gas fields in Bay of Bengal to BG Group of the UK but last month, struck a deal to sell them to state-owned ONGC for USD 1.2 billion, Gujarat Chief Secretary and GSPC MD J N Singh said last week.

Congress MP Jairam Ramesh has alleged a Rs 8,000 crore scam in a Central PSU being used to bail out GSPC that was on verge of a loan default.

Ramesh, in an open letter to SEBI Chairman U K Sinha, had alleged that GSPC has been trying to recover gas from the KG basin block for more than a decade without much success despite massive borrowings of close to Rs 20,000 crore.

Alleging that ONGC had flouted listing guidelines and did not secure approval of minority shareholders for the transaction, he said the state-owned company “suddenly” after 2014 had a realisation that buying GSPC’s gas block in KG basin is a virtue.

GSPC has spent a large sum of money, hired foreign experts and imported sophisticated equipment and yet could not find gas. “Then, why does ONGC deem it fit to pay Rs 8,000 crore to acquire this very block?” he said demanding a probe into the deal.