The group of senior ministers and BJP functionaries who gathered on August 5 at Prime Minister Atal Bihari Vajpayee's Parliament office were a grim and worried lot.

Just two days after toasting the BJP's "generational shift" at Delhi's Talkatora Stadium and promising a government with a "greater difference", the party was enveloped by searing controversy. Revelations that relatives of Central ministers, BJP MPs and scores of state-level functionaries had lined up for petrol pumps and LPG outlets threatened to shred the party's "moral" pedestal for good. The BJP was hoist with its own petard, seen to be animated by precisely the same profit motive that it had accused its political rivals of.

"Procedure was followed in selection of dealers. I had no role to play in this process." Ram Naik, Union Petroleum Minister

Not all leaders realised the depth of the crisis. Petroleum Minister Ram Naik resisted the suggestion that petrol and LPG dealerships be auctioned in future. "This will mean rich people will get dealerships," Naik argued, talking of the Government's "social justice" role.

But sensing the political ramifications of the controversy, Vajpayee scrapped 1,144 petrol, 1,788 LPG and 236 kerosene dealerships allotted since January 2000. Exceptions were made only for allotments to relatives of the Kargil war martyrs. Roughly 30 per cent of 3,168 dealerships had gone to BJP MPs, MLAs and RSS members or their relatives. Prominent among such beneficiaries were Himachal Pradesh Chief Minister P.K. Dhumal, Maharashtra state leaders Pandurang Phundkar, Annasaheb Dange, Punjab unit chief-and at least 25 party MPs, including Ram Singh Kaswan, Srichand Kriplani, Rasa Singh Rawat, Ram Bux Verma, Ramesh Chandra Tomar, Lala Lajpat Rai and Shyam Bihari Mishra.

Nation

HOW TO WIN A PETRO LOTTERY Naik's allegedly foolproof "procedure" was open to manipulation. It became a political mess. SELECT SELECTORS Naik appoints Dealership Selection Committees (DSCs), supposedly autonomous and invariably headed by ex-judges. But he has power to alter DSCs. LOAVES AND FISHES The Petroleum Ministry receives -requests- to influence the DSCs and allot pumps to political flunkies. BJP, allies pressure Naik to oblige functionaries. FIXED MATCHES DSCs are open to ministry+s suggestions. Some of Naik's judges protest, are removed. Most others are quite happy to clear applications of BJP-RSS men. CASH FLOW Successful candidates get an assured income. It is the oil company's task to acquire land and set up petrol or LPG outlets. Allottees secure readymade business.

Faced with tumbling skeletons, the Government had little choice. As BJP General Secretary Arun Jaitley pointed out to his colleagues, if they did not act the courts were bound to. Several deprived dealers have threatened to move court, but the prospect of their receiving relief are dim. In 1995, it was the Supreme Court that rapped Congress ministers B. Shankaranand and Satish Sharma for abuse of their discretionary quotas and set up guidelines. The Government plans to file caveats in each of the 3,168 cases to prevent ex-parte decisions when its order is challenged.

The BJP sought to make capital of having reacted to criticism. But the Congress and Left demanded Naik's head. In doing so, they provided the BJP the opening it was looking for. The ruling party counter-attacked by releasing lists of opposition MPs who had lobbied for petrol and LPG dealerships setting off a mudpie-flinging match.

Those who had penned such requests included Leader of Opposition in the Rajya Sabha Manmohan Singh, AICC General Secretaries Motilal Vora and Oscar Fernandes, the Opposition's vice-presidential candidate Sushil Kumar Shinde, Congress MPs Jagmeet Brar, Jyotiraditya Scindia, Margaret Alva and the CPI(M)'s Basudev Acharya. According to the BJP, Karnataka Chief Minister S.M. Krishna's brother and state Home Minister Mallikarjun Kharge's brother-in-law were among the beneficiaries.

SULLIED IMAGE: (from left) Naidu, Vajpayee and Advani at the Delhi meet

"The BJP will strive to deliver a government with a greater difference." BJP's Delhi pledge

Suddenly, the playing field evened out. Not only had the Congress been at the centre of previous petrol and LPG scandals, its MPs were lobbying with the Government to influence the supposedly impartial Dealership Selection Committees (DSCs). Congress spokesman Jaipal Reddy said Manmohan Singh had backed a widow's case and wondered, "Why is the BJP making Naik's resignation non-negotiable?" The BJP argued that since opposition MPs were themselves culpable, they could hardly demand Naik's ouster. "Will Congressmen campaign on the issue with their letters of recommendation in hand?" asked BJP President M. Venkaiah Naidu.

Nation

SPOILS OF THE GAME About 1,000 of 3,168 petrol, LPG and kerosene dealerships went to BJP men. At least 25 Congress MPs and 5 from the left parties lobbied for dealerships. 500 dealers in Punjab have threatened a hunger strike against the cancellation. These letter-writers are now keen to avoid the limelight "Shri K. Vijaya Lakshmi is a candidate ... I shall be grateful if you kindly see your way to help him out." Sushil K. Shinde, vice-presidential candidate "I shall be grateful if you will be kind enough to consider Smt Swinder Kaur's case favourably." Manmohan Singh, Leader of Opposition in Rajya Sabha

Some recommendations are quite direct. Scindia favoured a former Madhya Pradesh minister stating that the person was "very well known to my father. I would be grateful if you would consider his candidature sympathetically". Vora wrote, "I shall be grateful if you could issue the necessary instructions to the authority concerned for doing the needful." The letter of CPI(M)'s P. Mohan carried the stamp of the party office. Shinde and Vora used AICC letterheads. Fernandes wrote, "I shall be grateful if you could kindly look into the matter personally and consider him (the candidate) to get the dealership and oblige." Recommending an applicant who "belongs to my constituency", CPI MP Bhan Singh Bhaura was categorical, "I would like you to take necessary action so that the applicant is awarded the agency." The tenor of most letters suggests the MPs expected Naik to intercede with the DSCs.

While upbeat at having discovered chinks in the Opposition's armour, the saffron camp cannot deny that the expose-first reported in The Indian Express-has been a public-relations disaster. Till now, even the enemies of the RSS rarely questioned its financial integrity.

BJP leaders acknowledge that petrol and LPG dealerships are part of the politics of patronage. Deputy Prime Minister L.K. Advani told India Today, "This is why we have taken a drastic measure to cancel allotments." On incessant pressure from party cadre, he pointed out, "Power can be shared through appointments to various committees that the Government routinely disposes of. But, petrol pumps are clearly linked to commercial benefit and these are best allocated through auctions."

Naik argues the DSCs were simply following procedure. RSS joint spokesman Ram Madhav supports the Government's cancellation decision, but says, "There is no reason why an RSS member should be denied an opportunity that he can avail of as a citizen." But the procedure is tailormade for manipulation. The DSC has to determine a candidate's personality, business and managerial skills in a 10-minute interview. The chairman's assessment counts for 200 marks, the two other members' for 100 each. Once selected, the dealer needs to put in only a minimum investment-in some cases no more than Rs 50,000. Land acquisition, infrastructure and machinery is the oil company's responsibility. Little wonder the dealerships are in such high demand.

The controversy is also organically linked with another policy conflict. Naik has been resisting deregulation of the petroleum sector on the grounds that it represents "strategic interests". This puts him at odds with most of the Cabinet Committee on Disinvestment (CCD). He has tried to delay privatisation of HPCL and BPCL. The reasons become clearer when the two PSUs' 7,500 petrol outlets are considered. The Petroleum Ministry's proposal that the two companies float a public offer before handing over charge to a private company is merely a ploy to drag matters into 2003, by which time the countdown to the 2004 general elections would have begun.

Even the hurdles placed in the way of other players-Reliance Petrochemicals, Essar Oil, Numaligarh Refineries and ONGC-are part of a pattern. The new firms, granted permission to retail petrol, are yet to set up a single outlet. If they had, even their agencies would have been distributed by the DSCs, making a mockery of the market system. The new players' future may well lie in bidding successfully for either HPCL and BPCL. The stakes are high with nationwide petrol and diesel sales annually yielding Rs 23,000 crore and Rs 92,000 crore. "There is no strategic interest, only patronage," says a CCD member.

Even as the BJP and the Opposition smear one another, the political considerations behind the petrol and LPG allocations have knocked down arguments for protectionism and state control. The official power of patronage may have been dented just a bit. Crony socialism is one step closer to death.

-with Shishir Gupta