Govt to take call on BP now PDF Print E-mail
Tuesday, 03 May 2011 00:00
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In the mid-1990s, when Maruti was being run as a JV with Suzuki and the latter had finalised a new engine for the Maruti 800, the heavy industries ministry came up with a plan to send a group of joint secretaries around the world to evaluate other engines! Never mind that the cars the JV sold were on the strength of Suzuki’s technology, or that the bureaucrats had no particular expertise in evaluating engines. In 2011, as reported in FE yesterday, the oil ministry has written to the home ministry on the RIL-BP deal, to ask for its view of the antecedents of BP’s 13 directors (including its chairman Carl-Henric Svanberg), and its assessment of BP’s track record and abilities to handle deepwater exploration. That the ministry is concerned about what happened to the BP wells in the Gulf of Mexico is a good thing, but if anyone has to take a call on this, it should be the oil regulator (Directorate General of Hydrocarbons) whose job includes looking after the safety of oil/gas exploration, and not the home ministry. In any case, as the investigations into the accident have shown, the US regulator is also to blame since it okayed what BP proposed—safety is specific to each well/field, and not to companies per se. Even more intriguing, as FE has pointed out, is that BP has been a partner of RIL in the D-17 block, and the question of its capabilities has not arisen before. Indeed, it is curious that questions should be asked of its directors, given that BP already has a presence in India (it employs 8,000 persons in India, directly and indirectly).


Under normal circumstances, the oil ministry’s queries may have been seen as just routine bureaucratic paperwork. But given the history of how the oil ministry has delayed the Cairn-Vedanta deal, although it is clear the ministry has no locus standi, and you begin to get a bit worried—as FE has pointed out earlier, if ONGC has a dispute with Cairn on whether royalty payments are to be expensed or not, it needs to go in for arbitration, not get the oil ministry to arm-twist Cairn into accepting ONGC’s view if the deal is to be cleared.



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