india

Updated: Jun 04, 2019 23:11 IST

An informal group of ministers chaired by Union home minister Amit Shah met on Tuesday to discuss the rationale behind state-run Bharat Petroleum Corporation Ltd’s (BPCL) $2.4 billion investment proposal in a gas field in Mozambique, where Indian state-owned energy companies had picked up significant stakes in 2013, officials said.

The investment proposal was vetted by Shah along with other ministers before sending it to the Cabinet for approval as questions were raised over making huge investments in the project at a time when gas prices fell to $4-5 per unit, government and industry officials in the know said, requesting anonymity. The meeting was attended by foreign minister S Jaishankar, commerce minister Piyush Goyal, oil minister Dharmendra Pradhan and NITI Aayog CEO Amitabh Kant. BPCL chairman and managing director D Rajkumar was also present.

In the first term of the Modi government, this role of leading groups of ministers to take stock of key policy issues was played by the then Union finance minister Arun Jaitley, officials said. In the absence of Jaitley, the task has been assumed by Shah, the officials cited above said. Tuesday’s meeting at the home ministry was a clear sign of Shah’s importance in the Cabinet.

According to the officials, the ministers also discussed the race for resources and influence over Africa and India does not want to be left behind China on acquiring oil and gas assets in the continent. The ministry refused to give details of the meeting. “India’s strategic and long-term interests were discussed,” was the cryptic reply from a senior official who did not wish to be named. Email queries to the petroleum and finance ministries as well as BPCL did not elicit any response.

The Mozambique gas block that was acquired during the United Progressive Alliance (UPA) government by state oil companies with a combined investment of over $6 billion for a total 30% stake in the Rovuma Offshore Area-1 was subsequently criticised by the National Democratic Alliance (NDA), which felt the deal was overpriced due to a steep fall in international oil and gas prices. They also felt that ONGC’s $2.5 billion acquisition of Imperial Energy of Russia in 2008 was overpriced.

Officials said the incumbent government was adopting a cautious approach in making investments in oil and gas assets abroad because of controversies over the commercial viability of the two projects mentioned above.

On June 10, 2013, ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) had signed a definitive agreement with Videocon Mauritius Energy Limited to acquire 100% of shares in Videocon Mozambique Rovuma 1 Ltd for $2.47 billion. The company was holding 10% participating interest in the Rovuma Area 1 offshore block. According to the ONGC statement issued at that time, the block had an estimated recoverable reserve of 35-65 trillion cubic feet.

BPCL was already a 10% stakeholder in the project. ONGC picked another 10% stake in the block from the project operator, Anadarko, for $2.64 billion and later sold 4% of its stake to OIL.

The informal group of ministers’ meeting chaired by Shah was an unscheduled one. The meeting was called on a day when the President of Zimbabwe, ED Mnangagwa, called Prime Minister Narendra Modi to congratulate him on his election victory.

Apart from reviewing the country’s energy assets in Mozambique, the committee discussed how India could deepen its economic interests in a way that would be mutually beneficial.