This piece is written by Sucheta Dalal on the fued amongst Ambani brothers.
Anil Ambani talking about public interest is funny. But it seems only family feuds can throw light on a lot of murky deals. Few people in India understand the complex business of oil & gas pricing. So long as everything was a sarkari monopoly, there wasn’t any need to, especially because most utilities were subsidised for the ordinary person. Privatisation has meant deal-making, allegations of corruption and a sharp increase in prices. How does an ordinary person cut through the allegations, untruths and rhetoric between the Ambani brothers to figure out whether our utilities are priced right and the country’s natural resources are exploited for private benefit?
Unfortunately, most people do not care and see the battle between the Ambani brothers as a modern-day Mahabharat with all its trappings of wealth, power and glamour. But can we afford to ignore the core issues? If we do, we will have another Enron-like situation, where an unscrupulous US company worked a dubious deal with our netas and babus and silenced most of the media through pressure or incentives. A decade later, Enron’s plant (at three times the original capacity) remains shut and unviable in a power-starved country.
In its previous term, the UPA government remained a mute spectator to the brazen partisanship of the then telecom minister, D Raja, on issues of spectrum allocation and pricing. Even the Prime Minister’s Office pleaded helplessness over reining in the minister. Anil Ambani was then the happy beneficiary of the system. Much earlier, when Mukesh Ambani controlled Reliance Telecom, it was Anil Ambani who exposed the allocation of a whopping one crore shares to the late Pramod Mahajan’s kin to facilitate Reliance’s backdoor entry into the mobile telecom space by flouting all existing rules.
What is the connection between Enron, telecom and the war for gas between the Ambani brothers? In the 1990s, Enron’s arrogant muscle-flexing and inducements caused long-term damage to India’s power sector liberalisation. It is we, the people, who have paid the price.
The telecom industry spends huge money on advertising which gives it significant clout. That is why the media, barring occasional exceptions, is at pains to remain neutral while reporting the wrangling and twisting of policy that ensured huge profits to the industry. Both the Ambani brothers have benefited from this fact when they controlled Reliance Telecom at different times.
Now again, editors don’t want to be in the awkward position of having to take a stand on the gas issue. It would mean choosing between the warring brothers, who are both extremely powerful. So one celebrity editor, briefed and fed on an exclusive basis by PR persons on both sides, is none the wiser and wants the Supreme Court to decide the issue. That will, indeed, be the ultimate solution, but shouldn’t the media do its job of discussing issues, gathering expert views and presenting facts? The media will be aggressively intrusive on something like the Aarushi murder case and even destroy lives. But when two industry giants, with huge media budgets, fight a bloody war, we would rather take the issues out of the public domain, advice everybody to do the same and allow the Supreme Court to decide.
Interestingly, nobody knows this better than Anil Ambani himself. And, luckily, he has the power to buy himself a voice by spending crores of rupees to plant one blistering question a day on the front pages of every national newspaper. At the time of going to the press, four questions had been asked and six more are apparently in the pipeline. The questions he has posed are certainly of interest to the public and irrespective of issues that the brothers may have over sharing their stupendous wealth, we the ordinary people, need some answers.
Let’s paraphrase the questions so far. Anil Ambani is suggesting through his questions and other statements that Mukesh Ambani is using the support of petroleum minister Murli Deora to tweak policy and give Reliance Industries Limited (RIL) ‘super normal profit’ at the cost of public sector entities. In all this, the government would earn only Rs 500 crore. He says:
# The Petroleum Ministry wants NTPC to pay 80% more for gas, than what RIL had voluntarily offered it earlier, causing a Rs 30,000 crore loss to NTPC.
# The Petroleum Ministry has approved “a shockingly disproportionate 400% hike in the project cost” of RIL’s KG D6 gas field, from Rs 12,000 crore to Rs 45,000 crore. This will cause a loss of Rs 30,000 crore to the government and increase retail power tariffs by 50% or more.
# While global gas prices have dropped 80%, the Petroleum Ministry wants power and fertiliser companies to pay 20% more for gas from RIL.
# RIL’s KG D6 gas field is operating at only 40% capacity and can treble its production, creating an artificial scarcity and demanding a higher price.
These and other such questions that Anil Ambani has posed need to be answered. They are not about a property battle. So far, RIL has issued a single statement saying, “We emphatically refute and outrightly reject the baseless, tendentious and motivated allegations and insinuations…” It also calls itself a mere contractor for the government excavating gas from the KG basin. This is hard to swallow.
RIL must put facts on the table. And if it has its own stories about how Anil Ambani twists policy for his benefit, let’s hear those, too. For instance, we would all like to know why ADAG’s tariffs in Mumbai are soaring while the Tatas are able to supply power at more reasonable rates.
When it comes to mega-infrastructure projects, utilities (including telecom) and natural resources (land, water, mines), the lack of information has allowed a tiny elite to manipulate policy by agreeing to share the loot with our venal politicians. A few more family feuds and corporate wars are just the cleanser that we need.
Unfortunately, most people do not care and see the battle between the Ambani brothers as a modern-day Mahabharat with all its trappings of wealth, power and glamour. But can we afford to ignore the core issues? If we do, we will have another Enron-like situation, where an unscrupulous US company worked a dubious deal with our netas and babus and silenced most of the media through pressure or incentives. A decade later, Enron’s plant (at three times the original capacity) remains shut and unviable in a power-starved country.
In its previous term, the UPA government remained a mute spectator to the brazen partisanship of the then telecom minister, D Raja, on issues of spectrum allocation and pricing. Even the Prime Minister’s Office pleaded helplessness over reining in the minister. Anil Ambani was then the happy beneficiary of the system. Much earlier, when Mukesh Ambani controlled Reliance Telecom, it was Anil Ambani who exposed the allocation of a whopping one crore shares to the late Pramod Mahajan’s kin to facilitate Reliance’s backdoor entry into the mobile telecom space by flouting all existing rules.
What is the connection between Enron, telecom and the war for gas between the Ambani brothers? In the 1990s, Enron’s arrogant muscle-flexing and inducements caused long-term damage to India’s power sector liberalisation. It is we, the people, who have paid the price.
The telecom industry spends huge money on advertising which gives it significant clout. That is why the media, barring occasional exceptions, is at pains to remain neutral while reporting the wrangling and twisting of policy that ensured huge profits to the industry. Both the Ambani brothers have benefited from this fact when they controlled Reliance Telecom at different times.
Now again, editors don’t want to be in the awkward position of having to take a stand on the gas issue. It would mean choosing between the warring brothers, who are both extremely powerful. So one celebrity editor, briefed and fed on an exclusive basis by PR persons on both sides, is none the wiser and wants the Supreme Court to decide the issue. That will, indeed, be the ultimate solution, but shouldn’t the media do its job of discussing issues, gathering expert views and presenting facts? The media will be aggressively intrusive on something like the Aarushi murder case and even destroy lives. But when two industry giants, with huge media budgets, fight a bloody war, we would rather take the issues out of the public domain, advice everybody to do the same and allow the Supreme Court to decide.
Interestingly, nobody knows this better than Anil Ambani himself. And, luckily, he has the power to buy himself a voice by spending crores of rupees to plant one blistering question a day on the front pages of every national newspaper. At the time of going to the press, four questions had been asked and six more are apparently in the pipeline. The questions he has posed are certainly of interest to the public and irrespective of issues that the brothers may have over sharing their stupendous wealth, we the ordinary people, need some answers.
Let’s paraphrase the questions so far. Anil Ambani is suggesting through his questions and other statements that Mukesh Ambani is using the support of petroleum minister Murli Deora to tweak policy and give Reliance Industries Limited (RIL) ‘super normal profit’ at the cost of public sector entities. In all this, the government would earn only Rs 500 crore. He says:
# The Petroleum Ministry wants NTPC to pay 80% more for gas, than what RIL had voluntarily offered it earlier, causing a Rs 30,000 crore loss to NTPC.
# The Petroleum Ministry has approved “a shockingly disproportionate 400% hike in the project cost” of RIL’s KG D6 gas field, from Rs 12,000 crore to Rs 45,000 crore. This will cause a loss of Rs 30,000 crore to the government and increase retail power tariffs by 50% or more.
# While global gas prices have dropped 80%, the Petroleum Ministry wants power and fertiliser companies to pay 20% more for gas from RIL.
# RIL’s KG D6 gas field is operating at only 40% capacity and can treble its production, creating an artificial scarcity and demanding a higher price.
These and other such questions that Anil Ambani has posed need to be answered. They are not about a property battle. So far, RIL has issued a single statement saying, “We emphatically refute and outrightly reject the baseless, tendentious and motivated allegations and insinuations…” It also calls itself a mere contractor for the government excavating gas from the KG basin. This is hard to swallow.
RIL must put facts on the table. And if it has its own stories about how Anil Ambani twists policy for his benefit, let’s hear those, too. For instance, we would all like to know why ADAG’s tariffs in Mumbai are soaring while the Tatas are able to supply power at more reasonable rates.
When it comes to mega-infrastructure projects, utilities (including telecom) and natural resources (land, water, mines), the lack of information has allowed a tiny elite to manipulate policy by agreeing to share the loot with our venal politicians. A few more family feuds and corporate wars are just the cleanser that we need.
