Wednesday, March 10, 2021

Time to add 'Access to Internet' as a fundamental right under Article 19

In Nirmal district of Indian state of Telangana, a bike accident between two people from two different communities resulted in communal violence. Police enforced section 144 of CrPC to control the situation. 

Nowadays not much is required to start a riot. What worries me here is, as per news reports, administration disconnected internet services in those areas during riot. This became a habit for government(s) - immediately disconnect the internet services whenever something goes wrong. In these days, internet is next only to food, dress, house, and electricity. It is very critical for living. From the functioning of ATM, attending online classes, work from home(WFH), ordering items online; for almost everything internet is essential. Government(s) should not disconnect the internet like that. Agree that people may spread the news(which might result in further violence) using the same system. But, it's the responsibility of the state to prevent riots without blocking something so fundamental to living. 

It's time to think about a constitutional amendment to add 'fair access to the Internet' under Article 19.


Monday, March 8, 2021

Kochi - Koottanad - Bangalore - Mangalore (KKBMPL) gas pipeline: A new(delayed!!!) dawn in South India's gas future

Terminal at Kochi
hen state owned Petronet LNG commissioned a regasification terminal at Kochi, there was hope that homes and industrial sites from Kochi to Mangalore and Koottanad to Bangalore will receive piped gas; atleast in the cities through which the pipeline goes; days of cylinder gas are numbered etc.

However, it took more than 7 long years to complete the main pipeline itself. Finally at the beginning of this year, Kochi-Koottanad-Mangalore line was commissioned. Work is in progress on Kootanad- Palakkad-Krishnagiri-Bangalore stretch. Pipeline itself is 1,104 km long, developed and operated by GAIL. This pipeline passes through Kerala, Karnataka, Tamilnadu and Puducherry. 

Though late, it looks like a great achievement. However the devil is in the details. Kochi LNG terminal was commissioned in sep 2013 with a capacity of 5mmtpa(million metric tonne per annum). It took a very long time to build associated pipeline network. Main reasons were, opposition from people on safety grounds; land price disputes; and to get the right of way. Political leadership was also not able to bring any solution to the table. So the issues continued. Meanwhile, the estimated cost for pipeline jumped from  2915 crore to 5750 crore. Remember the terminal itself costed 4200 crore only. 

Terminal at Kochi

Not only that, in the absense of pipeline network, there aren't many customers. LNG terminal's utilization is just 10-20%. Can you imgine a plant running at such abnormally low utilization for 8 long years? Even after commission of Mangalore line max-utilization will be around 25-30% only!!!

Meanwhile, Dahej terminal which launched with 5mmtpa capacity in 2004 doubled its capacity to 10mmtpa in 2009. Added 5mmtpa more in next 7 years. Then 2.5mmtpa in two years after that. Now Dahej's total capacity stands at 17.5mmtpa. From 2013 to 2018, in 5 year time span Dahej handled 1000 cargos. How much Kochi handled? around 45. Out of that, 18 were for reload and 2 were for bunkering. Hence effectively 25!!!

Today pipeline supplies 3.8mn m3 of gas everyday in Kochi.

The delay is criminal; its not that state government got nothing from the project. Kerala government will get significant amount of money as taxes (approximately 1000 crore a year). 

If this project was completed 5 years back, then LNG termial utilization might have been very high by this time. Who knows; Petronet may even double its capacity. Kochi had a chance to become a major gas hub of India. 

There were some dealys due to completing technically challenging 540m stretch which crosses Chandravati River in Kasarkode district of Kerala. Here pipeline goes upto 8m in river bed. However here the river flows through a valley and elevation difference can be as high as 150m. Which made the construction difficult.

Hope that state governments will learn something from these long delays, and the money it costed to the exchequer. 1) Missing tax revenue, 2) Utilization losses at Petronet LNG terminal 3) Delayed gas network construction across south India 

Engaging with people and derive a political solution for the problems in time is one of the reason why people elect their representatives. Why its not happening with the required urgency? Its something which all political parties in Kerala should think. 


Thursday, March 4, 2021

Haryana - Breaking something which is working (The Haryana State Employment of Local Candidates Bill – 2020 aka Reservation in Private sector)

DLF Cyber City (courtesy: Wikipedia)
urgaon/Gurugram is one of the largest IT hubs in India. Located just 30km away from New Delhi, this city is part of the National Capital Region. The rise of Gurugram started when Maruthi Suzuki opened their plant there. A couple of decades later GE came. This was followed by DLF acquiring large swaths of land and building a modern city. Numerous companies came and set up their base or operations there. Proximity to the national capital, helped a lot in its growth.

You might be thinking why I am talking about Gurugram when the title states 'The Haryana State Employment of Local Candidates Bill'. Well, let us come to that, 

As per the 'Haryana State Employment of Local Candidates Bill',

a) 75% of jobs in the private sector, which offers a salary of less than 50,000 rupees/month, is reserved for people from the state.
b) 10% of that quota should be filled from the district where company is located.
c) Reservation is initially for a period of 10 years.
d) The rule is applicable to all companies, partnership firms, societies, trusts, limited liability partnership firms, and any person employing 10 or more people.
e) Objective is also to discourage, migrants seeking low-paid jobs.
f) Private establishments can claim exemptions if candidates of desired skills are not available. This is subjected to evaluation by a government officer.
g) Companies must register all employees who earn less than 50,000/month on a designated portal within 3 months of the bill coming into effect. 
h) Employer cannot hire a new person if this registration is not completed.  
i) Failure to provide 75% of new employment to local candidates will attract a fine between 50,000 to 2,00,000 rupees. An additional penalty of 1,000 rupees till they comply.

First, this law might not even be constitutional.

Second, Haryana and her industrial sector functioned just fine without these laws. Every state needs to reduce the unemployability rate but by generating more jobs and skilling the people; not by forcing private companies to work as government companies. Tomorrow other states can also restrict private jobs to their own domiciles; which is very much against the concept of India as a single country. Already ever-increasing percentage of reservations are depriving people of the opportunity in the government sector. The reservation was originally meant for SC and ST, who did indeed deserve that. However, nowadays every group that can assemble a bunch of people to show strength (and bring a region to stand still) demands reservation, and political parties gave in for their demand. 

A lot of people earn less than 50,000 a month. This covers most of the industrial, SME workforce. If a person likes to start an establishment of 100 people, which may make good profit using cheap migrant labour (partially) must employ 75 locals with higher wages. Probably that person might drop that idea; and we may import that item from China.  

This law also brings back the inspector raj. A government employee must certify that the company is compliant or people with the required skills are not available. This decision-making power is equivalent of giving those government servants an ATM machine. Inspector raj and license raj broke India and collapsed our economy in the past. We need to reduce the overbearing power of the government not to boost it. 

When I mentioned Gurugram, I also mentioned a lot of companies. Maruthi Suzuki was then owned by the Government of India and Suzuki Corp of Japan. GE is a US-based multinational.  Owners of DLF are from Uttar Pradesh. Other prominent companies in Gurugram Cargill India, Coca Cola, Honda, Oracle, Ericson, Pepsi, Google, Nestle, Hindustan Unilever, Reckitt Benckiser, Panasonic, Samsung, Accenture, Deloitte, KPMG, IBM, EY, Escorts Group, Hero Moto Corp, Alcatel, Sony, Whirlpool India, Bharti Telecom etc are from outside and generated a lot of opportunities for locals and provided a lot of revenue for state government. Remember a good percentage of Haryana’s revenue comes from Gurugram.


In the politically charged climate of the area, where farmer agitation is still going on this is a kind of offer to placate the people. This way government can take the easy way out; don’t have to worry about how to generate new jobs, but to take away the jobs which are already created by someone using their hard work. 75% reservation was the political promise of Jannayak Janta Party (a member of ruling BJP alliance). 

The irony of the fact is, in 2008 one of the founders of JJP, Ajay Singh Chautala (former MP and father of current Deputy Chief Minister of Haryana), and 53 others were charged in connection with the appointment of 3206 junior basic teachers in Haryana during 1999 and 2000. He and his father, Om Prakash Chautala (former Chief Minister of Haryana) was sentenced to 10 years imprisonment by a New Delhi court. The verdict was later upheld by Delhi High Court and the Supreme Court.

Reservation is a double-edged sword. It's good when applied in the right quantity for uplifting the scheduled tribes and those people who are at the bottom of the Indian social ladder and suffer just because they are born. However, providing reservations to groups, which forces the government hand for that by bringing the state to a standstill or providing it as a way to win elections has a long-term impact. Once provided, it’s not easy to take it back. 

Ironically, India is one of those rare countries where people fight for inclusion in the backward category. Bringing reservation to the private sector is not just immoral but criminal. They are already struggling under the Indian system which works extremely slow and where contract enforcement is a miracle. The state should do something for locals by generating jobs and opportunities; not by pushing people from other states away. Always remember, a huge number of companies operating in Haryana and providing jobs to locals are not from Haryana. Also, a lot of people from Haryana are working in other states and other countries. 



Crisis in Eastern Europe Named Nord Stream-2

Installation of PIG traps at the construction site in Lubmin

Ukraine is the gateway of Russian gas exports to Europe. Even after commissioning NordStream (the first one) a good quantity of Russian gas to Europe passed through Ukraine and other Baltic states. In 2017, Russia transported 93bcm gas via Ukraine. This is more than 48% of the total Russian gas supply to Europe. Remember, Russia supplies around 40% of Europe’s gas demand.

This created a set of circumstances that maintained balance in eastern Europe. Russia can’t cut off supply to Ukraine without cutting off its supply to Western Europe as well. Since Europe is a huge customer, its economically disastrous for Russia to cut supplies to the EU. If that happens, probably shale gas from other side of the Atlantic might fill that gap; which eventually creates more problems for Russia in the long term. After all, no one wants an unreliable supplier. Note that, Russia did cut off supply twice in this line (in 2006 and 2009). World was a bit different then.

This arrangement ensured Ukraine’s energy security. As per the deal signed at the end of 2019, Russia will pay 7bn USD over 5 years to Ukraine for gas transit rights. Ukraine’s GDP is 142bn USD (2020 estimates). Hence, transit fees are important for Ukraine. Since Ukraine controls the supply to EU, they will also get their supply.

As long as Ukraine holds the key to gas supply for Europe; Russia can’t simply turn off the gas to punish Ukraine and force them to agree on any deal which Russia wanted. It is here Nordstream 2 comes into the picture. This pipeline starts from the Russian mainland, passthrough seabed, and falls on Germany - bypassing Ukraine and other Baltic states. Once Nord Stream 2 is completed, Russian dependency on Eastern European countries will reduce considerably. After all, once the gas reached Germany it can be supplied to any western European country.

Original Nordstream (owned by Russian supergiant Gazprom) from Vyborg in Russia to Greifswald in Germany also passes through the Baltic Sea. This 1222 km long pipeline, has a maximum discharge capacity of 55 billion m3/a. The first line of this pipeline was commissioned in 2011 and the second line in 2012. Following this NordStream II project was started in 2018-19 before US sanctions on Russia kicked in.

Connecting pipe sections above water
Connecting pipe sections above water


From Germany's side, she needs a lot of gas. After the Fukushima disaster, Germany accelerated the shutdown of nuclear power plants. However, renewable energy is not able to replace fossil fuels completely. Germany wants to go ahead with the project. 

United States

At Washington, the previous administration under Trump and the current administration under Biden are not in favour of it. The threat of sanctions is in the air on companies that are working on the project. This already forced some companies to back out from NordStream 2. US stands to gain if Germany dropped the project. In that case US shale gas will get a larger market and Europe will invest in building LNG terminals across its shores.

Eastern Europe and Ukraine 

Eastern European countries fear that the pipeline will increase European dependency on Russia for energy. 

At this point, looks like that project might go through

Commissioning equipment at the Russian landfall

What this means to Eastern Europe and Ukraine?

1, they will be under the mercy of Russia for energy security. These countries can switch to US shale or gas from the middle east. Both are costlier and require additional investments in infrastructure.
2, Loss of huge transit fees for Ukraine.
3, Ukraine will also lose its leverage in Brussels, and the EU may not care much about Russian advances in old soviet states or how the Russian state deals with protesters.
4, Russia will gain more leverage over the EU.
5, Europe’s dependency on cheap Russian gas will increase and any further sanctions on Russia by the US (which blocks the sale of oil/gas) may not go down well in Brussels. 
6, US shale may never be able to beat Russian gas in terms of price. Once the pipeline is available, then western Europe might not invest more in building LNG terminals and other infrastructure required for shale gas import.