The Curious Case of KG Basin Scam, Reliance Industries & the Death of YSR Reddy

The KG Basin or Krishna Godavari basin is located at the coast of Andhra Pradesh and is spread over 50,000 sq km. It is this site where Reliance Industries discovered one of the largest gas reserves in India. In government records, the 7,645 sq km block is known as KG-DWN-98/1.

In 1991, under the LPG Liberalization Policy, Government of India opened the door for private players, for exploration and production of hydrocarbon. Small and medium sized blocks were opened up in this round which was followed up by giving out bigger blocks in 1999 as per the New Exploration and Licensing Policy (NELP). Through NELP, Reliance bagged the rights to explore the D6 block.

Since all mining resources belong to the people of India, government monitors the exploration and production of these. In the case of oil and gas sector, government enters into contractual relationship with the private player through a Production Sharing Contract (PSC). The PSC lays out roles and responsibilities of all parties, specifies the detailed procedures to be followed at different stages of exploration, development and production. It also specifies the cost recovery and profit sharing in the contract. Directorate General of Hydrocarbon (DGH) monitors the PSC. A PSC was signed between the government of India (GOI) and undivided Reliance Industries and its minority partner Niko Resources (10 per cent stake) for exploration and production of oil and gas.

When reliance was splited into two parts,gas business remained in the hand of Mukesh Ambani.Both the brother than kept on fighting over this issue.The brothers fought over this huge reserve of gas even though it was not theirs in the first place.

The very first line of a production sharing contract clearly says that “By virtue of article 297 of the Constitution of India, Petroleum is a natural state in the territorial waters and the continental shelf of India is vested with the Union of India”.

Their dispute was solved by supreme court.Court gave the judgement that reserve belong to the country and is government owns this reserve.

Ambani came to magical figure of $2.34 per mmBtu,when ONGC was providing the gas at half the price.

In June 2004, National Thermal Power Corporation (NTPC) invited bids for supply of gas for its 2600 MW power plant in Kawas and Gandhar. Reliance Industries, hopeful of starting production of gas by the time NTPC’s power plant is ready bid for the project and was awarded it as the lowest ‘techno-commercial’ bidder. A Letter of Intent (LOI) was issued to Reliance Industries to supply 132 trillion units of gas per annum to NTPC for 17 years at a price of $2.34 per mmBtu. Anil Ambani used this as a basis for asking gas for his power plant.

It is in common knowledge that the erstwhile Chief Minister of Andhra Pradesh, YS Rajasekhar Reddy, was deeply involved with the pricing mechanism being applied for the gas that was extracted from KG Basin. Remarkably, Reddy didn’t survive long after that, dying in a mysterious helicopter crash that had so many red flags that no other helicopter would take off in similar circumstances.

The roots of the issue took hold in 2006, when YSR in a rally said, “Gas is a natural resource, a property of the nation, not of a private company. It is for the government to decide who should get the gas, and also, at what price”. The dispute over sharing of gas wasn’t settled by mother, Kokilaben Ambani when there was a dispute between both Ambani brothers regarding the distribution of assets after the death of the founder and their father, Dhirubhai Ambani, and their mother, in turn, acted as the mediator between the brothers. He also asked for at least 10% of the gas allocation for the industrial development of Andhra Pradesh. Reddy even composed a letter to the Prime Minister Manmohan Singh, encouraging him to shield the Centre’s entitlement to distribute assets, and communicating fears that a dispute between the Mukesh-run Reliance Industries Ltd (RIL) and Anil-driven Reliance Natural Resources Ltd (RNRL) could hurt shoppers. Not just that, YSR additionally set up the Andhra Pradesh Gas Infrastructure Corporation to offer for the NELP squares and raid into the gas investigation, putting the state government in rivalry with the Ambani’s. This was in sharp difference to his predecessors. (

Speculations and rumors touted that Ambani has allegedly attempted to coerce him through 10 Janpath course, yet he demonstrated a centre finger to the two. Sources say that this connivance additionally has the contribution of professional TDP media noble Ramoji Rao’s Eenadu.

On second September 2009, Chief Minister Y S Rajasekhara Reddy’s crash landed on the Rudrakonda slope in the Nallamala woods. But the question is was it an accident or a planned assassination. The predicament is why the helicopter was replaced by a faulty helicopter just a few minutes before the takeoff, without informing the concerned parties. Furthermore why a flawed air ship with a pilot who as of now had issues in controlling the aircraft had been given to the CM. Then again for what reason didn’t the helicopter raised its height over 5500 feet altitude even subsequent to confronting poor climatic conditions, where the air ceiling capacity was 14000- 15000 feet altitude. Apparently, there wasn’t any chaos in the helicopter before the crash, recorded by CVR ( Black box ) which is an extremely speculative circumstance as a general rule.

Apart from this the news which captivates the vision is about a Russian journal publishing the mysterious death of YSR. Why a country miles away is interested in an Indian political affair where India itself isn’t bothered about it.


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