PM Narendra Modi government putting 'pressure' to stop GSPC from being declared bankrupt: Congress

The Congress today claimed that public sector Gujarat State Petroleum Corporation (GSPC) owes Rs 12,000 crore in loans to various banks, and accused the Narendra Modi government of trying to prevent the company from being declared bankrupt.

Senior Congress leader Jairam Ramesh claimed at a press conference that a Rs 20,000-crore scam has come to light in GSPC, 13 years after then Gujarat Chief Minister Narendra Modi announced in 2005 the discovery of a natural gas block in the Krishna-Godavari basin.

He cited two reports of the Comptroller and Auditor General (CAG) that noted that GSPC took loans of Rs 20,000 core from 15 banks and gave contracts for drilling to "four-five companies".

Money was spent but gas was not found and today GSPC is in a financial state that it needs to be referred to the Insolvency and Bankruptcy Code, 2016, the Congress leader alleged.

"Last year in August, under Prime Minister Narendra Modi's pressure, ONGC was forced to buy GSPC gas block and GSPC got a relief of about Rs 8,000 crore. It still has to pay Rs 12,000 crore to banks," Ramesh alleged.

He also cited the February 2, 2018, Reserve Bank of India (RBI) circular, under which if a company on March 1, 2018 owes banks more than Rs 2,000 crore and if it defaults, it should be declared bankrupt after 180 days.

Ramesh claimed that for the first time in 70 years, the cental government has filed an affidavit in the Allahabad High Court against the RBI circular.

Noting that the 180-day window for GSPC ends today, Ramesh said all eyes were on State Bank of India to which the corporation owes over Rs 1,200 crore as to whether it would declare GSPC bankrupt or succumb to "government pressure".

"Does State Bank of India have the courage to declare GSPC bankrupt," he asked.