india

Updated: Apr 17, 2019 09:22 IST

An investigation into a suspected Rs 2.5 lakh crore corruption case involving a long-term liquefied natural gas (LNG) contract with RasGas Company Limited of Qatar, which was raised in Parliament in 2012 when the Congress-led United Progressive Alliance (UPA) was in power, has found no evidence of wrongdoing, prompting the government to close the case.

The government “decided that no further inquiry is called for in the matter” an internal committee set up by the oil ministry found nothing amiss in the contract, and on the advice of the Central Vigilance Commission (CVC), the matter has been closed, an oil ministry spokesman said.

The oil ministry constituted the internal committee under its additional secretary & financial adviser (AS&FA) in November 2012 to investigate the deal after the matter was raised in the parliament on December 1, 2011.Other member of the panel was the director general of the ministry’s Directorate General of Hydrocarbons (DGH).

Lok Sabha member Vilas Baburao Muttemwar had raised the matter in the house. “Whether attention of the Government has been drawn to the alleged Rs 2.5 lakh crore Liquefied Natural Gas scam?” he asked the oil ministry. Giving him a reply in writing, the then minister of state in the ministry of petroleum and natural gas, RPN Singh, said that “the matter” was “under examination”. Muttemwar had been the minister of state for new and renewable energy in the first term of the UPA government.

The allegation was that Qatar-based RasGas Company Ltd, which merged with Qatargas in January 2018, had been contracted to supply high-value, rich gas to the Indian firm Petronet LNG Limited (PLL), but had been supplying relatively low-value, lean gas that caused material loss to the buyer.

Giving details of the panel’s findings, the oil ministry spokesperson said: “For change in gas specifications from rich to lean gas, the committee mentioned that (there is) no authoritative data to conclusively point that there could have been a price differential between rich and lean gas in (the) market. The committee suggested separate handling of rich gas to lean gas instead of co-mingling.”

“The findings of the committee were examined in the ministry and it was decided that no further inquiry is called for in the matter. Further, a copy of the inquiry report was sent to the Central Vigilance Commission (CVC) by vigilance department of the ministry. CVC advised the ministry to allow the matter to rest. In view of this, the matter has been closed,” the spokesperson said in a written reply to queries from Hindustan Times. The ministry did not provide specific details on this matter. PLL did not respond to an email query.

According to oil sector experts, rich gas is more valuable than lean gas. While lean gas is primarily made up of methane (C1) that is used as a fuel, rich gas also has other hydrocarbon components including ethane (C2), propane (C3) and butane (C4) and is used for value-added products such as petrochemicals and cooking gas (liquefied petroleum gas or LPG). According to the website of Hindustan Petroleum Corporation Ltd (HPCL), rich gas contains five or six gallons or more of recoverable liquid hydrocarbons per thousand cubic feet. Lean gas contains less than 1 gallon of recoverable liquid hydrocarbons per thousand cubic feet.

PLL, which had been sourcing about 7.5 million tonnes per annum of liquefied natural gas (LNG) from RasGas, first negotiated the deal in 1998-99. While, PLL is a private company, the oil secretary is the chairman of its board, and it is promoted by four public sector oil companies, Oil & Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC), GAIL India Limited and Bharat Petroleum Corporation Limited (BPCL).

An oil and gas sector expert, who was part of the negotiating team, confirmed that the original deal had been signed for supply of rich gas.

“Besides fuel, rich gas supply would have helped our petrochemical plants, which would have economic value,” the expert, who was once chairman of a state-run energy firm, said on condition of anonymity.

Another expert, who was also a member of the negotiating team, said on condition of anonymity that the deal for rich gas had been signed as promoters of state-run energy companies and promoters of PLL wanted it to be used for manufacturing petrochemicals. PLL imported LNG from Qatar at a fixed price of $2.533 per unit (per million metric British thermal unit or mmBtus) for the first five years. Later, the gas price was linked to the market price.

According to a government statement issued on February 26, 2009, PLL signed a contract with RasGas, Qatar in July 1999 for import of 7.5 million metric tonnes per annum (mmtpa) for a period of 25 years. As per the contract, supply of 5 mmtpa LNG commenced in 2004 and the supply of balance 2.5 mmtpa LNG was scheduled to commence in the last quarter of 2009.