EDITORIAL : THE HINDU, INDIA

All's not well with gas and oil

To the list of acronyms and alphabets — 2G, CWG, ISRO — that have given the United Progressive Alliance government such an unsavoury image in recent times must now be added another: KG. According to the draft report of the Comptroller and Auditor General of India on hydrocarbon production sharing contracts (PSCs), the public exchequer has suffered an as yet unquantifiable loss thanks to the “undue benefit” provided by the Ministry of Petroleum and Natural Gas to Reliance Industries Ltd., the operator of the gas-rich Krishna-Godavari basin fields. The CAG also found that Cairn India Ltd., the United Kingdom-based company which operates oilfields in Rajasthan, was the beneficiary of unwarranted official largesse. Broadly speaking, the CAG identified two major irregularities in the KG basin case. First, the government allowed RIL to inflate its capital expenditure (capex) claims for the D6 gas field without adequate scrutiny. The financial implications of this are obvious: given the nature of the PSC, the higher RIL's claimed capex, the lower the government's share of the revenues accruing from the production of gas. Secondly, the company was allowed to retain the entire field despite being required to surrender those parts of it where no hydrocarbon discoveries had been made. In the case of Cairn, the CAG says the Ministry allowed the company to expand the contract area by more than 1,600 square kilometres when the PSC did not allow for this. The CAG report also covers the joint venture between ONGC and the private sector BGEPIL and RIL in the Panna-Mukta-Tapti (PMT) offshore oil fields in Bombay High, but the failure of the JV to provide relevant records meant the audit remained inconclusive.

The CAG's hydrocarbon report is a reminder of the unhealthy relationship that exists between UPA government Ministers, bureaucrats, and big business. The constitutionally sanctioned body believes the flaw lies with the structure of PSC, which gives private operators an incentive to inflate their capex. But the Oil Ministry and its officials are faulted for failing to exercise their powers of oversight and also for actively favouring RIL on KG-related matters. That all was not well at KG was known as early as 2008 and 2009, when the fight between the two Ambani brothers over gas pricing brought various internal aspects of the project into the public domain. The CBI opened a probe into the role of the then Director General of Hydrocarbons but neither the Prime Minister's Office nor Murli Deora, who headed the Ministry at the time, saw any need to conduct an urgent, real-time investigation into all the financial aspects of the project. Thanks to the CAG, the people of India have a small hole they can peer into. But the government has a duty to drill deeper, far deeper into the irregularities the auditors have found.

Empowering slum dwellers

Two years after Finance Minister Pranab Mukherjee promised in his budget speech that India would become slum-free in five years, the United Progressive Alliance government has come up with legislation that might enable progress towards this goal. The model Property Rights to Slum Dwellers Act circulated recently by the Union Ministry of Housing and Urban Poverty Alleviation aims to improve the conditions of an estimated 93 million slum dwellers. The legislation would entitle every “eligible” slum dweller living in a slum to receive a dwelling place of 25 square metres of carpet area or its equivalent land area at “affordable” cost. It would confer property rights in the name of the female head of the household or in the joint name of the male head and his wife. This is a progressive course correction meant to check the prevalent male bias in determining housing rights. The proposed Act lays down a seven-year lock-in period to prevent the sale or lease of the allotted property but sensibly makes provision for mortgaging the dwelling units to raise loans for improving them.

There are some serious shortcomings in the model Act. The proposal to fix a cut-off date to identify “eligible” slum dwellers and provide the “ineligible” ones only with an “all weather” space for rent and not a proper dwelling needs to be rethought. Arbitrary cut-off dates and a rigid quota system are impractical to implement. Lessons should be learnt from the failed government schemes to regulate urban street vendors. If the social objective is to create slum-free cities, an inclusive definition that maximises the number of beneficiaries is an imperative. It is ironical that this model legislation, which is meant to stop forced evictions, has provisions to imprison and fine people who have constructed “illegal” structures on government land. Securing government property is a separate issue. Housing is a State subject and the success of the recommended legislation will depend on how well it is implemented by the various State governments. In 2007, the Union Ministry through its national housing policy recommended that 20-25 per cent of the built-up area should be reserved for low-income groups in all housing projects, including those built by private developers. This is yet to be implemented in many cities. What is critical is adequate supply of housing for the poor. If the vision of slum-free cities is to be realised, the stock of social housing must be vastly increased.