By R. Sasankan
“Ah Love! could thou and I with Fate conspire
To grasp this sorry Scheme of Things entire,
Would not we shatter it to bits -- and then
Re-mould it nearer to the Heart's Desire!”
– Omar Khayyam, Persian poet
Karl
Marx visualised a stage where the state would simply wither away. This
was the ultimate phase of his ideal socialist state. But there is a
massive gap between precept and practice – and the so-called
practitioners of his creed have proved Marx wrong.
Instead of the state withering or weakening its hold, they have become
Leviathans – not much different from Thomas Hobbes’ social contract
theory which posited the idea that civil war could only be avoided by an
absolute sovereign ruling a Commonwealth that he termed the Leviathan
in his book that bore the same title. Institutions that were once
perceived to be useful to society have been either undermined or
dismantled, especially in countries like Russia and China which
experimented with Communism.
Regulatory bodies underpin the rule of law in most countries. All
industrialised economies, except Russia and China, have
institutionalised regulatory bodies. India started the process of
setting up regulatory bodies about two decades ago but went about
creating them in the wrong way. The government ensured that these
regulatory bodies did not become so powerful that their writ would
undermine the powers of the bureaucracy and the politicians. Thus,
regulatory bodies became a parking lot for superannuated bureaucrats.
This coupled with the traditional knack of picking up the wrong people
for responsible jobs prevented these regulatory bodies from having the
desired impact.
The cash-rich petroleum sector has been doing reasonably well
notwithstanding the interference of the political party in power. The
petroleum sector was almost totally dominated by the public sector
companies since the days of Mrs Indira Gandhi but, with the entry of
companies such as Reliance and Essar in the downstream sector and
foreign companies in the E&P, the government came under pressure to
set up regulators. The bureaucracy blocked it for the upstream sector by
manipulating the creation of a technical body called the Directorate
General of Hydrocarbons (DGH) which royally messed things up. DGH, which
is part of the Ministry of Petroleum
and Natural Gas, only has an advisory role. But even in that limited
role, it has managed to play havoc in the E&P sector.
The government looked sincere in setting up a regulator for the
downstream sector when it enacted an Act to create a Petroleum and
Natural Gas Regulatory Board (PNGRB). But it again bungled while
drafting the provisions of the Act and selecting the team. The PNGRB is
now in its death throes. In the absence of a miracle, its funeral can be
expected very shortly.
None has criticised the Modi government for the present state of the
PNGRB and rightly so. The PNGRB never played a useful role in its
decade-long existence. Almost all its decisions that were challenged in
courts of law have been struck down. In desperation, the Board had
advertised for consultants to redraft the regulations but it is not in a
position to award the job to anyone.
Surprisingly, the Board which lacks a quorum has protested against the
government move to permit GAIL to set up CNG units along the
Jagdishpur-Haldia gas pipeline route. There is merit in its protest because
under the PNGRB Act, it is the only one empowered to authorise gas
pipelines and CGD units. Even those CGD units and pipelines created
before PNGRB was established were duty bound to seek regularisation from
PNGRB.
The Modi government has not commented on the state of affairs in PNGRB.
Not has it reacted to the regulator’s protest against the blanket
permission given to GAIL to set up CGD units. The PNGRB has been without
a chairman for the last two years. Of its total strength of five
members, it is has only one now. The government probably believes that
the country can do without a downstream regulator, a perception shared
by many within the industry. The government’s silence has frustrated the
ambitions of quite a few superannuated bureaucrats who have been
lobbying for the post of chairman.
But
the question is why the government is allowing the space occupied by
PNGRB to be wasted. All its employees are on deputation from PSUs and
they will have no problem in going back. The government can save on rent
for the space it now occupies by shifting the only surviving member to a
room elsewhere. He is a genuine expert in petroleum matters and his
talents can be utilised during the remaining period of his tenure
elsewhere.
The government will certainly come under pressure to create an effective
regulator if its plan to set up a mega oil behemoth by merging all the
oil and gas companies becomes a reality. On present reckoning, this
cannot happen in the next two or three years. As and when it happens,
the PNGRB Act itself will have to be changed drastically to create an
effective regulatory body. Perhaps, the Modi government is waiting for
such an opportunity to recast and remould PNGRB. The strategy is not to
create sound and fury by smashing it to bits but to allow its slow death
so that a powerful regulator can be created later. In Modi’s scheme,
the regulator ought not to be reduced to a weak body of retired
bandicoots.