Modi’s ‘Achhe Din’ aren’t a mirage for Swan Energy Ltd and its MD Nikhil Merchant, reports The Wire

Executive Director and MD of Swan Energy Ltd in Gujarat Nikhil Vasantlal Merchant, whose proximity to Prime Minister Narendra Modi is an open secret in the upper echelons of the Bharatiya Janata Party (BJP) and the government, is truly experiencing ‘Achche Din’ as public sector firms line up to do business with him, says a report ‘The Platinum Touch of Nikhil Merchant’ published by The Wire on Thursday.

According to the report, during the last days of the UPA government, the Income Tax department had carried out raids on Gautam Adani, a businessman known to be close to the Prime Minister, and Swan Energy Ltd, a little known firm that despite its name was largely involved in the textile and property business.

The company, which posted modest to negligible profits in the past three years, now has a proposed LNG terminal project worth ₹5,600 crore on the basis of off-take agreements with public sector oil companies and investments from two Gujarat-based PSUs.

Here are the major takeaways from The Wire’s report:

• While Gautam Adani is well known, Swan Energy’s Merchant has remained largely anonymous, yet he is “so important that senior ministers and bureaucrats [in the Modi government] speak of him as a man who can get things done.”
• While The Wire was researching this story to write about Merchant’s dealings with energy PSUs, they received “a flurry of ‘friendly’ calls and messages from top politicians and captains of industry suggesting [Merchant] wasn’t worth the effort”.
• Information with the Registrar of Companies shows Merchant is a director in 18 firms. Most of these firms transact little or no business, have no employees and no tangible assets.
• Annual report of Swan Energy for 2016-17 reveals the firm posted a profit of ₹1.68 crore on sales of over ₹300 crore. The firm posted modest to negligible profits in the past three years. In 2014-15, it posted Rs 4.7 crore as profit, which fell to ₹58 lakhs in 2015-16. Most of its income is from the textile business.
• In the last financial year, Swan Energy got a slew of working capital loans from a clutch of public sector banks—₹48 crore from the Union Bank of India and Oriental Bank of Commerce, and ₹5.8 crore from Dena Bank. It also got Rs 4.1 crore from a Gujarat-based cooperative bank, the Mehsana Urban Cooperative Bank, and ₹2.2 crore from Maharashtra government’s Sicom.
• The only time Swan has courted controversy was when the Gujarat government under Narendra Modi in March 2009 decided to transfer a 49% stake in the Gujarat State Petroleum Corporation’s Pipavav Power Company Ltd (GPPL) to Swan Energy for ₹381 crore.
• The state government had not invited competitive bids for the sale and the move had kicked up a political storm. “Through an investment of mere ₹381 crore, Swan Energy will take away ₹14,296 crore,” the opposition Congress alleged at the time. This figure included carbon credits too, which would devolve to Swan.
• Merchant has most recently put together a proposed LNG terminal at the Jafrabad port in Gujarat worth ₹5,600 crore on the basis of off-take agreements with public sector oil companies and investments from two Gujarat-based PSUs.
• In August 2016, India’s largest public sector oil companies, ONGC, IOC and HPCL threw their weight behind Merchant’s pet LNG project. The three firms booked 60% of the capacity of the terminal – a floating storage regasification unit, or FSRU. Another Gujarat government company, GSPC, is reported to have booked 1.5 MT of the terminal’s capacity at Swan’s proposed terminal.
• Last year two Gujarat government PSUs, Gujarat Maritime Board and Gujarat State Petronet Limited picked up a 26% stake in the project for around Rs 208 crore. The Gujarat government has not explained why its state-owned entities are investing in private sector projects when GSPC is developing its own LNG terminal in Gujarat.
• In October 2017, just months before the state went to polls, Gujarat’s deputy chief minister Nitin Patel approved a concession agreement of 30 years from the date operations commence and is extendable by another 20 years, with Swan Energy.

Merchant in a written reply to The Wire ruled out allegations of favouritism against him, claiming that all government decisions taken were strictly within official norms.

Curiously, almost everyone The Wire contacted for a comment, including Union petroleum and natural gas minister Dharmendra Pradhan and Gujarat chief minister Vijay Rupani, did not respond to queries. Gujarat’s energy minister Saurabh Patel, who went to college with Merchant and was his hostel mate, also denied any favouritism shown towards Swan Energy.