Vol. 5 Num 377 Sun. June 19, 2005  
Front Page

Mosharraf quits over Niko car controversy

State Minister for Energy AKM Mosharraf Hossain yesterday resigned over the Tk 1 crore Lexus scam after the prime minister asked him to stand down.

His resignation letter was forwarded to the president on acceptance by the prime minister.

Prime Minister Khaleda Zia in the evening asked Mosharraf to explain his position on the luxurious car he had received from Canadian company Niko Resources blamed for the Tengratila Gas Field Explosion early January, sources said.

Unsatisfied with his explanation, the prime minister asked him to resign.

Mosharraf, who was convicted of corruption in the previous BNP regime, resigned on health grounds, the sources added.

Although an investigation committee clearly blamed Niko that sealed the unsolicited deal in Bangladesh using political lobby in the "alternative power house" of the government, it has not been punished or penalised so far.

The Tengratila blowout damaged at least 10 billion cubic feet (BCF) of gas worth $2.5 million, apart from severely damaging the geological zone.

Instead of punishing Niko and its drilling contractor, who is backed by the "alternative power house", the minister punished the managing director of Bangladesh Petroleum Exploration Company (Bapex).

BAPEX is the partner of Niko in the country's one and only joint venture agreement in the gas exploration and development sector. The agreement was signed in defiance of the resistance and reservations by Petrobangla experts.

A Petrobangla evaluation found Niko disqualified to explore or develop gas fields during the second round block bidding in 1997.

Earlier yesterday, on his return from a US trip, Mosharraf told journalists that he would not return the Tk 1 crore 2005 model Lexus car to Niko, as there was "nothing wrong in it".

He claimed that the cost of the car would not be derived from the sale of Bangladeshi gas.

However, the unusual joint venture agreement between Niko and Bapex provides that all costs are to be borne by Niko, which is recoverable when Niko starts producing gas from a gas field. It means Niko's spending is basically funded by proceeds from gas sale.

It is presently selling Petrobangla around 20 to 40 million cubic feet per day (mmcfd) gas from its small Feni gas field.

Niko is liberally spending on government officials, including the minister, sources said. Recently, it sponsored a trip of several high Petrobangla officials.

Talking to the press at his residence, Mosharraf said, "There is no question of returning the car. This is just a conspiracy to hurt the image of the government and the party (BNP). Because if anyone can find something against a minister, that hurts the government's image."

"This is just blowing a small issue out of proportions. It is unjustified to call this a gift. I will use this for official purposes, it is not for my personal use. It will go back to Bapex once I am done with it," he said.

The Bapex MD himself delivered the car to him. "I liked the car. I used it for a couple of days and then asked them to install a flag stand," Mosharraf added.

Mosharraf's driver received the car from Niko Resources on signing a paper. "This was not appropriate. My personal secretary should have done that," Mosharraf said.

"As a joint venture partner, Niko can give anything to Bapex. When they will leave Bangladesh, their assets will be with Bapex," he added.

Mosharraf said if he had received a car from the government car pool, he would have considered returning the Lexus to Bapex. "All companies under Petrobangla have multiple cars given by foreign companies," he added.

However, none of such cars comes even close to Lexus; all of them are jeep that came as part of the projects for pipeline laying or driving on rough terrain. There is no Lexus or Mercedes in Petrobangla's stock, sources confirmed.

Before indulging in Lexus, Mosharraf had been using two Pajero jeeps from the Gas Transmission Company Ltd (GTCL) and another from Titas Gas. One of these cars was returned recently. His son uses one Pajero and his private secretary the other, sources said.

Mosharraf claimed that he was not aware of the Tengratila investigation report's estimate that more than 10 BCF gas was damaged in the Tengratila explosion. He claimed that "compensation" is being "paid" by Niko.

He also justified Niko's giving him the car. "They have another car of the type. So they thought of giving one to Bapex."

A faulty and unusual contract has kept Niko Resources unaccountable to Petrobangla, the oil and gas regulatory authority that constitutionally regulates all oil companies working in Bangladesh under production sharing contracts (PSCs).

Niko has no contract with Petrobangla as the government high-ups violated all rules and regulations to award the Tengratila gas field (also known as Chhatak West Gas field) along with two other fields through a joint venture with Bapex.

Bapex has been given 40 percent share in a trade-off that allows Niko access to these fields, but Bapex has virtually no role in the operations.

This field as well as Feni and Kamta fields were originally ring-fenced as "marginal gas fields" for future use of Petrobangla. Niko got all these in addition to an unexplored field known as Chhatak east through an unsolicited deal.

But for any other oil company, the rule is that they must come through competitive bidding and sign PSCs that give the companies specific deadlines and tasks.

In case of the rule for giving away the ring-fenced gas fields, if such a field is located within a block where an oil company is operating under a PSC, that company gets priority.

The Tengratila field is located within block 12 where Unocal is operating. When the government, under the influence of a certain "Bhaban", handed this area to Niko back in April 2003, Unocal protested.

Petrobangla had also expressed reservations about the joint venture between Niko and Bapex on the grounds that it does not follow any recognised process.

Still, Niko got the joint venture and the energy ministry argued that the government is represented here through Bapex's joint venture involvement.

Niko was originally promoted by former energy secretary Towfik-e-Elahi during the Awami League regime. However, the company got a stronger lobby in the certain "Bhaban" after the BNP came to office.

In 2003, Niko developed the Feni marginal gas field with a small reserve. It started supplying gas to Petrobangla without fixing a price, thanks to Mosharraf's relentless pressure on Petrobangla.

Meanwhile, Niko also purchased stakes from US giant Chevron-Texaco in the Block 9 oil and gas exploration.

Mosharraf's questionable roles

After getting the portfolio, Mosharraf strongly promoted gas export by US company Unocal. At the same time, he played contradictory roles when Petrobangla tried to file a compensation claim against Unocal for the gas lost to the Magurchhara blowout. At first, he did not allow Petrobangla to file the $685 damage claim for the loss.

Later, when this claim had to be submitted, he repeatedly said the government would take Unocal to court over the matter. However, there has been no such move.

The Daily Star in an in-depth report in 2002 showed a corruption involving Tk 60 crore in a pipeline project of Titas Gas. The report showed that more than half the money was swindled and despite internal investigation reports submitted to the minister, he backed up the corrupt axis.

The Daily Star also exposed a corrupt meter reader who made millions by swindling Titas and owns huge assets, cars and an industry. The minister again did not punish him.

The minister had been interfering with appointments in the nine autonomous bodies of Petrobangla. The Daily Star reported that some of these appointees were involved in big-time corruption and systematically raised crores of taka every month through different illegal means. The minister never acted to remove the officials or even investigate these matters.

About Tk 200 crore is drained out of the Titas gas every year. Sources say a part of this sum ends up in the pockets of some influential quarters to make sure the corrupt axis remains unscathed.

In the past, Mosharraf was accused of taking kickbacks from Japanese company Marubeni during the controversial Kafco deal in the early 90s. This deal still squeezes out millions of dollars from Bangladesh every year, while ensuring profits for Marubeni and its partners. Mosharraf was the then chairman of the deal implementing authority, Bangladesh Chemical Industries Corporation (BCIC), and the industries secretary.

After the fall of Ershad regime, Mosharraf was convicted of a rather insignificant graft. However, things changed when he joined the BNP.

In 1997, Mosharraf took money from Marubeni for a trip to London and Hong Kong.

The much-talked-about Lexus car