Oil and ‘Outsiders’: Outrage in Assam Over the BJP’s Decision to Privatise Oil Fields

Ever since the 1980s, keeping “outsiders” out of the oil industry has been a deep sub-nationalist issue in Assam.

Credit: PTI

A protest against the privatisation of oil fields in Assam, led by Akhil Gogoi. Credit: PTI

Tez dim, tel nidiu.”

Back in 1980, Dulal Sarma, a leader of the All Assam Students Union (AASU), slashed open his chest with a blade to write these Assamese words with blood on a road in Guwahati – thus creating one of the most enduring images of the six-year-long students’ agitation Assam saw against “outsiders”.

The words, which meant “We shall give our blood, not oil”, became one of the most popular slogans of the agitation which helped fuel a widespread assertion of Jatiotabadi or a sense of strong sub-nationalism in the state. When the leaders raised that slogan in protest marches, masses responded with approval, “We shall spill our blood but shall never part with the oil which we own.” The Numaligarh and Guwahati oil refineries are the products of the sentiments this slogan evoked in the 1980s.

Assam’s newly elected chief minister Sarbananda Sonowal also shouted this slogan at the time. It defined the then conspicuous ‘us versus them’ battle line. ‘Them’ meant the central government, widely looked at in the state as a colonial force akin to the British, interested only in plundering its natural resources.

Sonowal in those days was a leader of AASU, which spearheaded the agitation against undocumented Bangladeshi immigrants along with the All Assam Jatiotabadi Yuva Satra Parishad (AJYCP). Much has changed since. He is now the face of the Bharatiya Janata Party (BJP) in the state, a party whose government at the Centre has recently taken the decision to auction 12 of Assam’s oil fields to private players – in other words, to “outsiders”.

Over the years, Sonowal may have shifted his base from AASU to the Asom Gana Parishad (AGP) and then to the BJP, but it turns out that the traces of the strong sub-nationalism seen in the 1980s around tel (oil) has remained intact. Indications of this have appeared repeatedly in the last two weeks – in local newspaper headlines, heated debates on Guwahati-based TV channels, protests by students’ organisations like AASU, AJYCP and the Tai Ahom Yuva Parishad (TAYP) and various trade unions, and also in conversations on social media and elsewhere.

Union petroleum minister Dharmendra Pradhan addressing a press meet. Credit: PTI

Union petroleum minister Dharmendra Pradhan addressing a press meet. Credit: PTI

Doubts and protests

Since Union petroleum minister Dharmendra Pradhan said at a press meet in Guwahati on June 25 that 12 small oil fields of the state are among the 67 fields across the country which the Centre would let open for international bidders on July 15, all the political parties, including coalition partners of the Sonowal government – the Bodo People’s Front (BPF) and the AGP – have been raising questions. Those opposed to the move are accusing the government of “selling the state’s resources to outsiders” in the name of bringing poriborton (change), a term the BJP and its coalition partners extensively used to defeat the 15-year-old Congress government in the April assembly elections.

Firebrand RTI activist and farmers’ leader Akhil Gogoi was the first to protest the move. On June 25, the general secretary of Krishak Mukti Sangram Samiti (KMSS), with more than 400 supporters in tow, flashed banners and raised slogans outside a five-star hotel in Guwahati where Pradhan was meeting 200 potential private bidders.

One of the banners said, “Tez dim, tel nidiu”.

The same day, in the upper Assam town of Duliajan, which has the headquarters of the public sector unit Oil India Limited (OIL), AASU members burnt effigies of Prime Minister Narendra Modi, Pradhan and Sonowal, demanding the Centre roll back its decision. It also called for a 12-hour Assam bandh. On July 13, it plans a protest march in Nazira, an oil-rich district of the state.

TAYP also called for a bandh on July 3. From July 4 to 8, the AJYCP joined the agitation with a series of protests across the state including yet another Assam bandh and blocking tNational Highway 31 and train services. It threatened to intensify its agitation if the Centre didn’t withdraw its decision.

The petroleum minister said, “These 12 oilfields, which have a resource potential worth Rs 17,000 crore, would not only help roll about Rs 4,000 crore in Assam’s economy, but will also create jobs and add to the state’s revenue from oil royalty”.

Not only that, the Centre also has the plan to turn “Assam into the oil hub of southeast Asia“. The Centre, the minister said, in its Hydrocrabon Vision 2030 for the northeast, has envisaged investing Rs 1.30 lakh crore in the petroleum sector in the region in the next 14 years, of which Rs 80,000 crore will be invested in Assam alone. “In the current financial year, we are investing about Rs 6,000 crore in Assam,” he said. .

The numbers quoted are impressive. So is the hope for job opportunities for local youth and a potential jump in the state’s earnings from oil royalty, both crucial for the betterment of the state. Yet, not too many seem to accept Pradhan’s argument.

“This is nothing but an attempt to sell our natural resources to multinationals,” Akhil Gogoi told local media. He said, “The BJP had promised to protect jati, mati, bheti (ethnicity, land and resources) of the people of Assam in its campaign for the assembly elections based on which people voted for it. But within just one month of coming to power in the state, it has put up 12 oilfields for sale to private companies.”

In a letter addressed to the prime minister, KMSS said, “Assam’s petroleum resources have served little the interests of the region earlier and this must change. Earnings from these resources must be carefully invested in Assam to allow her to prosper economically. The decision to allow Foreign Direct Investment and thus handing over these oilfields to the private economic concerns will further ensure that Assam will again be deprived of her rightful claim to petroleum.”

It is a sentiment shared by many in the state. Speaking to The Wire, AASU president Dipanka Kumar Nath said, “Privatisation of oil fields would take away the people’s right over the state’s resources. In Gujarat, the Centre handed over the oil fields to the state-run Gujarat State Petroleum Corporation through a notification. But in Assam, it is giving the oil fields to private parties though like Gujarat, the Assam government also has a company, Assam Hydro Carbon Corporation Limited (AHCCL), since in 2006.”

Though AHCCL was formed in September 2006 to explore hydrocarbons and other energy sources, the state has not been able to do much without the Centre’s help.

Nath said, “ONGC, OIL or the state-owned oil corporations (there are two more besides AHCCL) could have entered into joint ventures with private parties for these fields. If they are involved, the people of the state will reap the benefit through jobs and other services but an international company doesn’t have any such obligation to the people.”

The 12 oil fields to be auctioned on July 15 are Sapekhati, Jeraipathar, Sarojini, Duwarmora, Dipling, Kherem, Lakhmijan, Bihbor, Uttar Pothoria, Pothoria, Charaideu and Borsila. While the first six are with OIL, the rest are presently under ONGC. On June 25, Pradhan explained why public sector undertakings have been kept out of it, “Many of the big oil sector companies do not have the technology or managerial skills to exploit small oilfields and so we are allowing firms that have the technology and skill to bid for them”.

Guwahati-based political commentator and economic analyst Adip Kumar Phukan did not agree with his explanation. “That argument is wrong. OIL couldn’t work in the Jeraipathar field because of local resistance. The government failed to assure people about the safety of the Rohmoria embankment near the field. However, OIL is still extracting oil from Sarojini,” he said.

Phukan, also a former AJYCP vice president, told The Wire, “The aim is to systematically weaken the oil PSUs operating in the state and allow private operators to move in. Even though the prime minister commissioned the Assam Gas Cracker Project last year with fanfare, its proposed plastic park failed to take off. GAIL, the main promoter of the project, is now said to have decided to transfer the polymer generated from the project to Kanpur. Plastic industries there will generate employment from our raw material. The same will happen with the oil fields.” He asked, “In the Naga Accord, the Centre apparently has allowed the Nagas to have the sole right over their natural resources. Why can’t it be given to the people of Assam?”

Phukan felt the state government should instead “think up an education policy linked to the three important resources of the state – tea, oil and coal – to ready the local youth for the specialised posts.”

Yet another sore point finding resonance amongst people is the reported Rs 10,000 crore that the Centre owes to the state as oil royalty. Though the Modi government is paying oil royalty to Gujarat on pre-discounted rates as per a Supreme Court order, it refused to honour that term for Assam last year, leading the Tarun Gogoi government to go to the Supreme Court.

On July 6, after meeting union finance minister Arun Jaitley in New Delhi on the issue, state finance minister Himanta Biswa Sarma told reporters, “Assam is hoping for a favourable verdict in the Supreme Court when the case comes up for hearing on July 22. The minister assured me that when the Centre releases the oil royalty, Assam would get Rs 2000 crore.”

Useful plans?

Regional sentiments aside, the Centre must focus on raising the country’s domestic production of oil as India is now reportedly the third largest consumer of oil in the world. According to Pradhan, “Around 79% of India’s demand for oil and 42% of its demand for gas is met by imports”.

“Prime Minister Modi has envisioned a target of reducing import dependency on oil and gas by 10% by 2022. The current bid round aims to augment the domestic oil and gas production in the country,” he said.

As per the Oilfields Regulation and Development Act, though the Centre can regulate and develop the oilfields, the state is the real owner of the land and natural resources. This is why the operator must receive licences and lease documents from the state government to function on ground. It must also pay a fixed royalty of 12.5% to the state. However, the Centre’s Discovered Small Field Policy, which Pradhan inaugurated in Guwahati on June 25, places the fields for auction under the Centre’s jurisdiction. It has also replaced the commodity sharing policy with a revenue sharing policy. Under the new policy, private players will have pricing and marketing freedom on the natural gas produced from the fields – a point that is not going down well with the protesters.

Energy expert Surya Sethi pointed out, “There is no bar on a state seeking a share of the revenue in addition to the royalty. For example, in the recent coal block auctions, the Centre has agreed to transfer the amounts bid for acquiring the concessions to the host states.”

Sethi, though, is not convinced of the Centre’s move to auction the small oil fields to lower imports, “Do not be fooled by the numbers relating to the reserves. They are tiny. How much these fields will ever produce is really up in the air”.

“Since ONGC and OIL have spent money in discovering these fields, the government should have asked them to seek foreign partners, technology and expertise to exploit these fields in a time bound manner if at all there is any chance that they can be economically exploited. But my understanding is that the state oil companies demanded compensation (from the government) for their exploration costs which was not allowed.  They are also not being given any carried interest in these fields,” he said.

Speaking to The Wire, political and economic commentator Swaminathan Ankalesaria Aiyar too questioned the need to lay open the small fields for it. “Assamese chauvinism has long come in the way of oil exploration. The government must dismiss it for the narrow-minded silliness that it is. But I think the government’s focus on conventional oil, including small fields, is excessive. When the shale deposits (in Assam and Arunachal Pradesh) are so huge, this should have been a huge priority (for the government). There may well be technical problems, and we need the best technology in the world, hence freedom for all multinationals to explore,” he said.

According to news reports, the June 25 event in Guwahati saw the participation of companies like GeoEnpro, Nippon Power, Eagle Offshore, Jubilant, HOEC, GEECL, Jaybee Energy, SKG Global, Cheval Developers, KEI-RSOS, PFH Capital Advisors, Nityam Resources and Siddharth Enterprises besides representatives from ONGC, OIL, BPCL, BPRL, NRL, AIDC and ICC.

Sethi though doesn’t think it will turn to actual bidding. “Even if a global player has the required experience, technology and expertise, it might find it too small a prospect to establish a base overseas. Importantly, the global appetite for oil and gas investments is at an all-time low right now,” he said.

The bidding process the government has adopted concerns him though. “My biggest worry is the absence of a pre-qualification criteria. It appears that anyone can bid for these fields. This can have disastrous outcomes such as physical damage to the oil/gas field and surrounding area and/or the risk of the resources being locked up with companies that simply do not have the capacity to tap the scarce and limited resources. Even if there is no elaborate pre-qualification, we can and should keep the right to reject a bid based on considerations linked to technical, technological and financial capacity.”

Exploiting shale oil too, Sethi felt, “poses many technical issues for India that are difficult to overcome with current shale technologies”.

Concern for technical and environmental issues stemming from reckless privatisation of the oil fields is not as strong a part of the growing public outrage as the “outsider” issue. However, it is an issue that the state government rather not face. Not only Sonowal, many prominent faces of the 1980s agitation are now a part of the government. Being on the other side of the “Tez dim tel nidiu” slogan, they know too well how damaging this strong anti-Centre sentiment can become – not only for the government, but also for the BJP at a time when it has an ambitious plan to grab power in the rest of the northeastern states.