Removal of Reddy from oil ministry raises storm

The 'demotion' of S Jaipal Reddy from petroleum and natural gas minister to the relatively unimportant science and technology ministry has been widely slammed by the opposition as well as by anti-corruption activists as a kowtowing to Reliance Industries Ltd, operator of the flagging Krishna-Godavari gas fields.

This is the perception emerging in the media and elsewhere as well. The shares of RIL rose 2 per cent on the Bombay Stock Exchange at Monday's close, reflecting the almost universal assessment that Reddy's ouster spells a big respite for India's most valuable company.

Reddy is being dubbed as 'honest' by activist-turned-politician Arvind Kejriwal of India Against Corruption as well as by the mainstream opposition. He is seen as refusing to cave in to the Mukesh Ambani-promoted RIL on its demand for an upward revision of gas prices before 2014, when a revision is due.

He also seemed unwilling to take RIL's figures for exploration and production costs at face value. Further, he was thought to be holding up RIL's attempts to further explore the potential of the K-G fields in the Bay of Bengal, with output from the D-6 block having dipped to a fraction of the original estimates.

The Bharatiya Janata Party, the Left parties and the anti-corruption brigade came down heavily on the government for "letting the energy giant dictate terms".

Significance is seen in the fact that Reddy kept away when Moily took charge of the petroleum ministry on Monday morning. Instead his junior minister minister R P N Singh, who has now been shifted as minister of state for home affairs, did the honours in ushering in the new oil minister.