Khuntia blocks Swan-IOC deal but regrets it later

Vol 18, PW 10 (15 Jan 15) People & Policy

Somebody should keep special secretary and financial advisor SC Khuntia in the loop about Dharmendra Pradhan’s wishes.

During an IOC board meeting on December 29, Khuntia unwittingly defied Pradhan by criticising IndianOil’s move to book 1m t/y capacity at a proposed 5m t/y FSRU project off Pipavav promoted by Mumbai-based Swan Energy, saying it was too expensive. He later embarrassingly backtracked.

Khuntia objected to the proposal, saying Swan is charging higher regasification fees than Petronet-LNG at Dahej, arguing that IOC will pay Rs65cr ($10m) more per year for regasification charges with Swan. Over 20 years, said Khuntia, that’s a lot! Petronet-LNG charges Rs44.70/mmbtu ($0.71) regasification charges but Swan wants Rs57.38/mmbtu ($0.92) for its FSRU, expected to begin operations from 2017.

Did Khuntia know Swan has links with the ruling BJP or that IOC is under intense pressure from Pradhan to sign? Such was the ‘Pradhan effect’ that everything from receiving the Swan proposal to putting it on the Board agenda was miraculously completed in four days, impossible without lobbying from above. “Khuntia wasn’t told,” says an IOC source.

“Otherwise he wouldn’t have dared block it.” Luckily, Khuntia realised his mistake and on January 9 (this month) he abruptly withdrew his earlier queries and the meeting minutes will no longer show them.

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