FE Editorial : Oh brother!

Tue, Oct 13 02:13 AM

So murky has the Ambani sparring over natural gas contracts gotten that we find it difficult to express optimism even over their olive branch exchange this weekend. As recently as on Thursday, the Anil Dhirubhai Ambani Group threatened to file a criminal case against the head of India's upstream regulatory agency—Directorate General of Hydrocarbons (DGH)—for "irresponsible, absurd and baseless" allegations about ADAG threatening its chief. This was just the latest round fired from the Anil Ambani armoury, which earlier hurled accusation at petroleum minister Murli Deora of taking "a partisan and biased approach favouring Reliance Industries" headed by elder sibling Mukesh. Beyond its internecine implications, this conflict has not only complicated the pricing of natural gas from one of India's biggest fields, but also provoked the government to weigh in on a contract between private parties and claim eminent domain over all of India's natural resources—a claim that agitates foreign investors and makes even us wary. Now, with the Supreme Court scheduled to start hearings in the RIL-RNRL fight on October 20, Anil has invoked his mother's blessings and Lord Shiva's powers to say that all can "be resolved in a matter of weeks". RIL's response: this is not merely a family matter, but a national issue. With this, at least, we are in complete agreement.

But far from covering itself in laurels via a smart and clear strategy, these columns have found the government micromanaging at the expense of a broad and coherent set of guidelines. Unlike, say, stock markets (Sebi) and telecom (Trai), oil still does not have a proper regulator. Gas pricing is still decided by a group of ministers. DGH has failed to signal independence from the oil ministry. The Ambani brothers' dispute over the supply of gas from the K-G basin has also taken a toll on India's largest-ever auction of oil and gas blocks. Big foreign players have largely maintained a distance from the previous seven rounds. As for the eighth one, even the DGH head anticipated that the fight between the two leading corporate giants would have a negative impact on the latest auction. As we write, latest reports suggest that nearly half of the 70 blocks offered have found no bidders. The global financial crisis hasn't helped. A recent Iraqi round was a near failure and Venezuela has postponed bids for crude blocks in the Orinoco region to next year. Both the aforementioned competitions represent huge, proven reserves. In such challenging circumstances, and given that India's energy future is at stake here, India cannot afford to have the Ambani brothers hold up its gas supply. However frail the olive branch dangling between them may be, all energies should be concentrated on strengthening it to reach a resolution and move forward.

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