Why Privatisation of 12 Oilfields in Assam is an Emotive Issue

Thirty-six years after energy-rich Assam witnessed widespread protests over the issue of natural resources, coinciding with the violent upsurge over the foreigners’ issue, the state is again in the throes of large-scale agitation over the privatisation of 12 gas and oil fields.Recently, the Sarbananda Sonowal-led BJP government in Assam announced its decision to privatise 12 discovered small oil and gas fields of OIL and ONGC across the state through global bidding. This sudden move has evoked strong reactions across the state. The Asom Gana Parishad (AGP) and the Bodoland People’s Front (BPF), which are allies of the BJP, has demanded that the government review its decision.Call for Protection of Natural Resources A couple of weeks ago, the anti-talks ULFA(I) faction vehemently opposed the move and warned of serious consequences. The Tai-Ahom Yuva Parishad called a 12-hour Assam bandh which evoked complete response in the Upper Assam districts where the oil fields are primarily located. The All Assam Students Union (AASU) and the peasant organisation, Krishak Mukti Sangram Samiti (KMSS), too staged protestsacross the state.Eighteen ex-AASU central committee members are now in the present BJP government. Almost all the major leaders and ministers of the BJP government were ex-AASU leaders, including Sonowal who rode to power this time by invoking the ‘jati-mati-bheti’ slogan. In the electoral campaign this time, the BJP raised issues like protection of natural resources and the siphoning off of profits from the oilfields bygovernment-owned and private companies. The Numaligarh and the Guwahati oil refineries owe their origins to the historic 1985 Assam Accord.Whose Oil is it Anyway?The Centre hands out the exploration lease and mining license as per the Petroleum and Natural Gas Rules, 1959, with respect to the Oilfields Regulations and Development Act (ORDA), 1948. However, while the Centre is empowered to regulate and develop the oilfields, the state is the actual owner of the land and the natural resources, including minerals.Thus, a particular operator must receive license and lease documents from the state government, according to schedule 6A of the ORDA, and in return the private company pays a fixed royalty (12.5%) to the state. The ownership of offshore oilfields, on the other hand, rests solely with the Centre.Discovered Small Field PolicyAccording to the government’s Discovered Small Field Policy, a new revenue sharing policy rather than the previous commodity sharing policy has been declared. Under the policy, the Centre has offered 46 contract areas with 67 oil and gas fields, estimated to produce over 625 million barrels of oil and oil equivalent gas (O+OEG) in-place.The new policy stipulates that private players will have pricing and marketing freedom for natural gas produced from blocks. At a time when the Digboi and Numaligarh refineries are on the brink of closure following a shortage of crude oil, the new policy fails to provide any effective solution especially when a particular operator has the freedom to transport the crude oil to any part of the country. Also the uniform licensing policy will allow operators to explore all forms of oil and gas resources, including unconventional natural gas like coal-bed methane, shale gas and oil, tight gas and gas hydrates. Assam Oil Sector in Trouble?State government’s decision to privatise 12 oilfields erupts into a political issue with BJP allies, AGP and BPF not in favour of the move.Newly elected chief minister Sarbanand Sonowal’s government may be headed for a crisis as several ex-AASU members, the outfit organising protests across Assam, are members of the cabinet.‘Discovered small field policy’, the new exploration policy initiated by the Centre in May 2016, gives greater autonomy to private players on issues related to pricing and marketing.Fears loom large as the locals apprehend loss of jobs and exploitation by the private sector.The Royalty IssueIn an interesting turn of events, Petroleum Minister Dharmendra Pradhan suggested that the Assam government approach the judiciary for recovery of pending oil royalty which amounts to around Rs 10,000 crore. On the other hand, a pending case filed by the previous Congress government in the Gauhati High Court sought directives toONGC and OIL that they pay royalty on crude oil on pre-discounted rates like in the case of Gujarat, following a Supreme Court order.A senior ONGC official working in the Bombay High Offshore oilfield said that “Employment generation and not royalty is the issue. There are many oilfields in West Bengal where not a single drop of oil has been generated but ONGC has been allowed to hold on to them just for the sake of employment, which is unfortunate.” Thousands of qualified youths leave Assam in search of jobs as privatisation has crippled the oil sector. The private players in the 12 oilfields will hire cheap labour for a certain contract period whereas other jobs will be taken by people from outside of the state since there is no job reservation for the locals. A senior ONGC official working in the Bombay High Offshore oilfieldPublic vs PrivateFor the first time in January 1999, India threw open the country’s hydrocarbon reserves for the private sector. ONGC is India’s largest company in terms of revenue and produces around 69 percent of the country’s crude oil. Since then, ONGC has been increasingly sidelined in favour of private players like Reliance. Nothing much has changed as the first thing the BJP government did after coming to power in 2014 was to take advantage of ONGC’s high share prices to propose a 5 percent stake selloff and thereby hoping to improve India’s public finances. While the Assam Hydrocarbon and Energy Company Ltd was incorporated in September 2006 with the objective of exploring hydrocarbons and other energy sources, nothing much has been achieved on the employment and empowerment fronts. But in Gujarat, the Gujarat State Petroleum Corporation has been given full control of discovered small fields.Recent reports suggest that an Oil India Ltd former CMD heads a private company that bid for the 12 oilfields. Sources said that when the officer was CMD, six of these 12 oilfields were declared not profitable. Over the years, many such cases have surfaced in Assam, crippling not only national public enterprises such as ONGC and OIL but also state PSUs like the Assam Hydrocarbon and Energy Company Limited. (The writer is a Guwahati-based freelance journalist)Also read:No Stake in Resources for B’deshi Illegal Migrants: Hazarika Panel

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Why Privatisation of 12 Oilfields in Assam is an Emotive Issue

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Topics: Sarbanand Sonowal Assam accord