Tellurian-Petronet—A Shoddy Modi Clumsy Deal
Capitalism does not permit an even flow of economic resources. With this system, a small privileged few are rich beyond conscience, and almost all others are doomed to be poor at some level. That’s the way the system works. And since we know that the system will not change the rules, we are going to have to change the system.Martin Luther King, Jr.
Democracy coupled with capitalism is posing great threat to the mankind in modern times. Capitalism is against the things that we say we believe in- democracy, freedom of choice, fairness. It’s not about any of those things now. It’s about protecting the wealthy and legalizing greed. Under capitalism, man exploits man. The global politics is framed by a conglomerate of capitalists, politicians and academia that thrive at the cost of common people with foul play to fool the public through media control—the serpent hisses where the sweet birds sing.
A recent example of this foul play can be traced in the backdrop of a clumsy deal between India’s Petronet signing an LNG deal with the US’s Tellurian. As it happens in the world of capitalism, the deal under debate is far more a political rather economic deal. Indian Media was full of exaggerations and sensationalism about planned investment of Indian PSU Petronet in American LNG Company Tellurian while celebrating “Howdy Modi” in Houston, Texas, USA. As per the deal, a $ 7.5 billion agreement was signed by Tellurian with Petronet LNG Ltd which will buy proposed liquefied natural gas (LNG) terminal in Driftwood, Louisiana, USA to ship sale gas to India. Petronet will spend $2.5 billion (INR 17,668 Crores) for an 18% equity stake. The deal was announced on 21 Sep 2019 in the presence of Mr. Narendra Modi and Mr. Donald Trump.
However, the facts have revealed that this pact was a political stunt and replication of a Memorandum of Understanding (MoU) already signed by these companies on 14 Feb 2019. Indian media itself is now revealing that it was not a deal or an agreement but a second MoU between the two countries while the process is subject to due diligence and approval of respective Board of Directors. It is becoming clearer with each passing day that the Liquefied Natural Gas (LNG) deal between India’s Petronet LNG and US-based Tellurian is more political than good business. Perhaps in this scenario, Indian National Congress leader Rahul Gandhi has also alleged that Mr. Modi through the visit to USA/LNG deal has made canvassing for Trump and annoyed Indian friends of the Democrats Party.
Interestingly, the deal was disfavored six months back by the Petronet LNG board due to changing global gas market dynamics, where the fuel was available in abundance at rock bottom prices. Moreover, Modi/BJP govt also want to showcase the LNG deal as a first long-term LNG import contract signed since Modi govt came to power in 2014. It may be mentioned that all the previous deals – 7.5 million tones with Qatar, 1.44 million tones with Australia, 2.5 million with Russia and 5.8 million tones with the US – were all signed during the Congress-led UPA regime which cast shadow on the motives of recent covenant.
In the backdrop of swinging statements from Tellurian and Petronet LNG (India), the deal has become dubious like other mega deals announced by Modi led BJP govt. Intriguingly, Tellurian is one of the sponsors of the ‘Howdy Modi’ event in Houston. Moreover, some top officials associated with Tellurian have also contributed to Donald Trump’s campaign through funding organizations like Tellurian PAC (Political Action Committee). According to the data available until June 2019, it has contributed 59% of its funds to Republicans. On the other hand Petronet LNG (India) is a joint venture government company set up in 1998 to import LNG and set up LNG terminals in the country. The joint venture is between GAIL India, Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC) and Bharat Petrolium Corporation (BPCL). Petronet has two terminals, one in Gujrat, which is a joint venture with Adani Group and the second is the Kochi LNG terminal. To simplify, the deal has raised eyebrows because an Indian company is funding an LNG terminal in the US, which will help the US create jobs in the year Trump is seeking re-election as US President.
Both US and Indian officials are hoodwinking the world about the deal showing a different prospective through glittering generalities by stating that the Petronet-Tellurian deal is now a prestige project for India-US relations. State department Acting Assistant Secretary for South and Central Asia Alice Wells said the deal was “so important” to the relationship because it showed that investment was a two-way street where “India is investing and creating jobs in America ” with the Petronet investment resulting in an estimated 50,000 jobs and $60 billion in exports. To tune Allice Wells’ statement with fact, the pricing of Liquified National Gas is dwindling every time which makes this deal volatile. The recent downturn in manufacturing, coal dependence, the lack of regasification plants and pipeline infrastructure in India will reduce the demand for LNG.
It would be interesting to know that back in 2011; Gas Authority of India Limited (GAIL) had entered into 20-year contracts with American companies Cheniere Energy and Dominion Energy to buy 5.8 million tons of LNG a year with fixed annual fees. It has since been reselling much of it to other markets due to lack of demand. The demand of over 1.3 billion people in India is a sizeable market for US energy companies. India has also hosted the “India Energy Forum” 13-15 October at Taj Palace, New Delhi—gathering energy leaders to further important dialogue on India’s new energy future. In a bid to get foreign investors, India recently planned a cut in corporate tax rates may be to favour some favorites in the market. Based on the track record, it is most probable that Modi’s investment in mega corruption scandals (controversial Rafale Aircraft deal, demonetization etc), the proposed LNG deal is likely to prove another mega scandal of Shoddy Modi.