CCI meet no show; setback for investor confidence: Experts

Vikram Mehta, chairman, Brookings India and Vinayak Chatterjee, CMD, Feedback Infra, share their view on the first Cabinet Committee on Investments (CCI) meeting that was held today. No decision was taken in the meet. Concerned ministers have been asked to come back with their suggestions on how they can resolve matters pertaining to those blocks in question.

COMPAT adjourns hearing on cement cos plea against CCI Below is the edited transcript of the interview. Q: We don't have very much from the government, the information and broadcasting (I&B) minister said that it was a fruitful meeting and they discussed the oil and gas sector holistically. Concerned ministries have been asked to come back with their suggestions on how they can resolve matters pertaining to those blocks in question, what do you make of it? Chatterjee: I am disappointed. First, NIB was formed then it was converted into Cabinet Committee on Investments (CCI) in the month of November. From November onwards, we have been hearing that the first meeting of the CCI is a historic occasion and it will certainly take up not the entire infrastructure agenda but selected sectors for resolution. I&B minister briefed the media that today they discussed the modalities and the agenda.    Today there was an expectation from the nation of action and but instead we got a rather flat meeting by saying we will mull, ponder, look for suggestions from the ministries and not one size fits all, etc. So, this is certainly disappointing, the country expected far more action. Q: Are you disappointed as well and we are often accused here in the media of building up expectations, but in this case we had the finance minister on the road shows going on record saying that we are going to hold a CCI meeting at the end of this month and that will in a sense set the stage for de-bottlenecking large infrastructure projects. The deputy chairman of the Planning Commission also said the same thing. At the end of all of that we have a meeting that reviews holistically the oil and gas sector and comes up with absolutely no roadmap or no decisions of where to go? Mehta: I am disappointed but I am certain that a large number of people in the Cabinet must be disappointed. This is a government has taken few important steps in last few months to revive investor confidence. Here we have a decision which is a no-brainer. We import 80 percent of our crude oil, we made certain discoveries and those need to be monetised. All over the world, there is a synergy between the defence ministry and the oil and gas sector. These synergies are established well before the first dollar is invested and in India we have a situation where companies have already made investments and also discovered hydro-carbons but are now unable to monetise those molecules because of a dispute between two government ministries. Disappointment is a very light way of putting it, but this is again going to signal to the investor community that we take one step forward and two steps backwards. Q: I want to take that point forward because when Veerappa Moily spoke a couple of days ago this is exactly what he said that I don’t want to do the next new exploration licensing policy (NELP) rounds till I iron out all of these issues. I am sending a signal out to foreign investors but my question is what is the signal that we are setting out to foreign investors or investors even domestically because as Vinayak was pointing out at the end of this exercise which began a couple of months ago we don’t seem to have truly understood what is the architecture of this animal and is it going to be any different from the previous committees that have failed to arrive at any unanimous or positive conclusion as far as these matters go? Mehta: This is an issue that goes beyond any committee. This is an issue that needs to be settled as a matter of course, if we intend to monetize or develop our indigenous hydrocarbon resources. This committee was setup to make sure that different departments were able to harmonise their decisions and that we eventually took a decision that was integrated and cohesive. However, let us put that aside for a moment and let us just focus on the energy sector and within that the oil and gas sector and ask ourselves the question why are we shooting ourselves in the foot. The oil and gas sector has over the last three years, done everything possible to persuade the investor community in India and outside not to invest. They changed the contract terms, they offered seven year tax holiday on natural gas and they changed that too and now they are going back and saying that investments that were made and cleared will not be allowed to proceed because the defence department thinks it is a security risk. You can just ask yourself where does all this lead to? It leads to frankly a complete abatement of exploration expenditure and that is going to push us over the energy cliff if we don’t realize the consequences of this. So, it goes beyond just the mandate of the committee on investment. It is something that has a severe national consequence. Q: This is what I am being told by sources that a specific timeline has been set by the Prime Minister for the oil and defence ministers to sort out these issues. Does that give you any consolation in the midst of this disappointment? Chatterjee: It doesn’t because from the time the national investment board (NIB) was adopted and changed to cabinet committee on investment (CCI) as I said we have had two months. These are almost emergency times for the Indian economy particularly the infrastructure sector. So, the relevant people who are supposed to find solutions whether it is , its certainly as Vikram said it is the oil and gas sector but there were expectations about the synchronization of forest and environment clearances for coal blocks, there were 25 major thermal power projects, which were supposed to have stuff released for their fuel linkages….. (Interrupted) Q: None of that was finally on the agenda of the CCI. All that went to the CCI in the form of the formal agenda today was only those oil and gas blocks that were up for clearances, that was the only agenda item for the CCI today. So, power etc didn’t even make it. Chatterjee: When the Prime Minister of the country chairs a meeting of the cabinet committee on a particular topic, can’t we as citizens expect that in 60 days time the concerned people would have come to the meeting with alternative solutions. And at the end of the day the leadership would decide we are going with this solution, aren’t 60 day enough for that. I share the anguish of Vikram to say that as a nation we have every right to expect convergence and decision making of this limited agenda, at the first meeting. We have not got that and therefore we stand disappointed.