Firewalling the Big Fish

This is with reference to the article “C: A Controversial Case Study—Attempts Are Being Made to Bail Out a Gujarat Government Company” by Paranjoy Guha Thakurta (EPW, 23 July 2016). Apart from the observations by the Comptroller and Auditor General (CAG), the basic issue is that Gujarat State Petroleum Corporation (GSPC), with no experience in offshore exploration and production, went ahead with a difficult high temperature, high pressure area by hiring contractors with dodgy credentials. It is also surprising that the Directorate General of Hydrocarbons (DGH) and the Management Committee (with representatives of the Ministry of Petroleum and Natural Gas—MoPNG) allowed amateurs to tackle such a field. Even after that, the GSPC has shown poor contract management skills, as seen from the CAG’s report that shows it incurring avoidable losses and benefiting some clients at its own cost.

It is an elementary financial principle that you do not borrow short to invest long. This is precisely what has been done here. Even bridge finance seems to have been invested. This cannot be sheer ignorance and the motives are suspect.