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Mukesh Ambani – Narendra Modi Nexus and why there is TDP-BJP Alliance in AP
Let me take a little time to set down the facts. Of course, you can come to any opinion after reading what follows, but that is always the case in such contentious matters. So here goes:
1. In the late 90s, an oil company, Cairn, made discoveries of significant gas in the Krishna Godavari (KG) basin. In an effort to create a level playing field to allow private and public companies to bid for the same projects – all on lands and seas owned by the government, the government created a New Exploration and Licensing Policy (NELP)
2. Under the first NELP plan, bids were called for contractors to explore and develop these Government-owned potential oil fields. Reliance Industries teamed up with a Canadian firm, Niko Resources (90% Reliance, 10% Niko) and won the right to explore and develop 12 out of 24 blocks offered. (You can find details on the Indian govt website here: petroleum.nic.in/NELP-I.doc).
3. Since then there have been several more NELP bids, and Reliance has won a few of those.
4. Reliance-Niko outbid ONGC, Cairn and others to these blocks.
5. The basic bidding criteria – and you can read a sample bid document here http://petroleum.nic.in/nelp91.pdf if you have the interest and patience – was the amount of profit share offered to government of India by the bidder, and the lowest operating cost the bidder commits to that it can adjust every year. These bidding criteria have changed slightly since – but that is not germane to the issue.