I have very little to say by the way of opinion about ongoing battle between the Ambani brothers - both among India's leading industrialists - over the pricing of gas extracted by Mukesh Ambani's RIL from the Krishna Godavari (KG) Basin off the coast of Andhra Pradesh under the production sharing agreement between them and the government of India. I understand from reports in media and the discussion in the parliament over this issue that as per an agreement between the two brothers at the time of splitting the Reliance empire between them, RIL was to supply to RNRL gas from the KG Basin at $2.34 million British thermal unit (mmBtu) for their plant in Dadri in Uttar Pradesh for next seventeen years and that RIL to supply gas at the same price to the government-owned power generating company NTPC as per the contractual arrangement between RIL and the government of India. So far it was so good until RIL announced it would now supply gas at $4.2/unit instead of the agreed rate at $2.34/unit to both RNRL and NTPC citing huge rise in production cost. The matter went to the high court which ruled in favor of Anil Ambani's RNRL by directing RIL to supply gas as per original agreed price. At this point the government-or its oil ministry to be precise- joined in the court battle appearing to favor the rise in price proposed by RIL. Anil Ambani openly accused the petroleum ministry of taking side of RIL. That is when all hell broke loose and the battle between two corporations spilled into the parliament. Anil Ambani used RNRL's annual general body meeting of its share holders to openly launched scathing attack on the government. Media has consistently kept itself focused-or over focused - on the issue, mostly confusing the reader or the viewer about who is right and who has been wronged.
As I have mentioned earlier I have little to offer in terms of who could be right because agreements between companies and governments are always complex in its fine prints and one must not only fully read but must also be competent enough to comprehend complexities of these agreements to pass any judgment or take sides. So I am not taking side. But by being neutral, one thing I can say as a lay man and it is that prima facie it appears that the government’s position in this matter raises more questions than it answers. It is baffling to me that the government should insist on increase in price of an essential national asset when the primary responsibilities of any government should be to control or fight price rise. Is the government blind to the fact by pushing for higher price of gas; it is harming the interest of its own company? Is the government so dumb to not understand that buying gas at higher rate will ultimately affect consumers? Or may be it is not blind, nor is it dumb as I think, but clever enough to understand that a large chunk of consumers who matter during elections are not going to be affected because they get and will continue to get free or highly subsidized power. Damn the middle-class who will mainly bear the burden of rise in power tariff. Who cares! And damn the NTPC. It is after all public sector company. Let it bleed. We have enough tax payers’ money to waste on consequences of our manipulative practices.
As I have mentioned earlier I have little to offer in terms of who could be right because agreements between companies and governments are always complex in its fine prints and one must not only fully read but must also be competent enough to comprehend complexities of these agreements to pass any judgment or take sides. So I am not taking side. But by being neutral, one thing I can say as a lay man and it is that prima facie it appears that the government’s position in this matter raises more questions than it answers. It is baffling to me that the government should insist on increase in price of an essential national asset when the primary responsibilities of any government should be to control or fight price rise. Is the government blind to the fact by pushing for higher price of gas; it is harming the interest of its own company? Is the government so dumb to not understand that buying gas at higher rate will ultimately affect consumers? Or may be it is not blind, nor is it dumb as I think, but clever enough to understand that a large chunk of consumers who matter during elections are not going to be affected because they get and will continue to get free or highly subsidized power. Damn the middle-class who will mainly bear the burden of rise in power tariff. Who cares! And damn the NTPC. It is after all public sector company. Let it bleed. We have enough tax payers’ money to waste on consequences of our manipulative practices.
No comments:
Post a Comment