Mukesh, Murli and Anil
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How many times have you heard, including in the various courts the case has been in, the view expressed that the Ambani brothers should go in for mediation, preferably with their mother involved – tumhare paas maa hai, uske paas jaao na! Sounds pretty funny doesn’t it, after all it’s precisely because the brothers couldn’t resolve their disputes, with or without maa that they’re in the courts for so many years. But more than that, even in the extremely unlikely event of the two brothers wanting to conciliate, they cannot and that’s where Petroleum Minister Murli Deora comes in. It’s best to break up the case into two parts to figure this out. Basically, as part of the family settlement that’s now supposed to have been signed by Mukesh Ambani as Mukesh Ambani and not as Reliance Industries’ chief, the two brothers agreed on the supply of gas from the KG Basin to Anil Ambani’s power plants. This mentioned the amount of gas (28 mmscmd) and the fact that the terms would be similar to the ones RIL had signed with NTPC – that is, for 17 years and at a price of $2.34. So far, all clear? In late 2005/early 2006, when Reliance Natural Resources Limited was still controlled by RIL, a board meeting was called and a board resolution passed on the agreement – since this, according to the Anil Ambani group, put lots of caveats on the gas supply, its director on the company (JP Chalasani) objected but was overruled since the other two directors were Mukesh Ambani loyalists. A few days later, RIL executives signed the agreement with RNRL – except they signed it on both sides, that is they also signed on RNRL’s behalf. This is what Anil Ambani went to court on – that the contract did not reflect the spirit of the MoU and this is why the MoU keeps coming into the picture. This is why the courts keep asking how, if Reliance Industries is challenging the MoU, the Reliance empire got carved up … but that’s another story. Working out a settlement to ensure the contract reflects the true spirit of the MoU presumably is something that has a chance, even if similar to that of a snowball in hell, of getting settled between the two brothers. Here’s where Murli Deora comes in. Apart from the issue of the MoU and the contract, there is now the issue of whether RIL even has the right to sell the gas it gets from the KG Basin. At the time RIL signed the Production Sharing Contract (PSC) for the KG Basin gas with the government, at the time it signed the contract with NTPC and RNRL, the PSC was quite clear that RIL had all the freedom to enter into such contracts. But when the fight between the brothers escalated, the ministry said RIL could not sell the gas without its permission. The government then repeated this in various affidavits in various courts – though the Group of Ministers’ minutes clearly said their decisions did not apply to existing RIL contracts with NTPC and RNRL, the government is firm that it alone controls who will get the gas and at what price. So even if the Ambanis decide to bury the hatchet, how does one take care of the government’s view that RIL has no rights to sell gas without its prior permission? Or is everyone assuming that once the brothers settle, the government will automatically reverse its stand? Tells you just how low the government has fallen in everyone’s esteem. |
(8 votes, average: 3.75 out of 5)
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November 12th, 2009 at 8:33 pm
Well all these types of issues gaining edge in the market. Govt cant spontaneous actions like that. this is an injustice with Mukesh Ambani.he has full right to do anything with his money and products.So Govt has to think again………………………………
November 6th, 2009 at 4:56 pm
Nice, isn’t it, to believe this is just Ambani vs Ambani with colourful filmi posters thrown in (maa hai, nahin hai, paisa hai etc)
Thousands of crores of gas under the sea off the coast of India, protected by the Indian Navy one shd think. Somehow, ONGC explorers can never find anything but pvt companies are superquick with discoveries in basins ONGC is supposed to have mapped. Difference of incentives there. The aam aadmi is not a fool, he has changed the government since the exploring licences were given and he is asking, who owns this gas?
November 3rd, 2009 at 4:18 am
See what control does to the resources of a country.
1) Oil and Gas sector in India should be deregulated and let the free economy take care of petroleum product prices. Let the winners evolve with no restrictions, no subsidies, no controls. (One can imagine what will happen to ONGC - Office Nahi Ghar Chalo!)
2) It is frustrating for the investors in R companies, but there is a way out - stay out of both these companies. There are ample opportunities elsewhere in India today.
November 2nd, 2009 at 2:02 pm
One thing clear in all this is that the government has lost face. While initially not involved, it suddenly decided to jump in. DGH VK Sibal has been facing allegations and the CBI is investigating into this matter. Its high time that the PMO takes corrective measures against the Petroleum Ministry. Because of this whole mess, NTPC too is suffering and the government needs to do something about that fast!
November 2nd, 2009 at 8:35 am
Even assuming that Govt arguments are valid,the crux of demerger was equitable distribution between brothers without compromising interests of minority share holders.So one way would be to segregate the gas entity as a separate company and give 50% shareholding to each of the shareholders of RIL & RNRL including the two brothers.Thereafter the gas may be sold whichever way Govt wants or Courts decide but every one gets an equitable stake.
November 1st, 2009 at 7:31 pm
It is evident that the government’s stand is meant to allow Reliance to renege on its contractual obligations towards RNRL and NTPC. If Mukesh reconsiders, in a Keynesian sense, the facts change and so will the government’s mind.
November 1st, 2009 at 9:05 am
My opinion:
Once the govt gave the contract to RIL to find gas and once gas is found, to give a part of the earnings as taxes to the govt, is all I understand.
RIL bidded for the exploration, took the risk, invested their own money (not govt’s) and are clearly owner of the gas to be sold to ANYONE at the rate they desire.
If govt was so keen to keep all the rights with themselves, they might as well do their own exploration!
Otherwise, it is like asking someone to buy the car and take the risk whether the car is a dud or a beauty, and then NOT allow him to take decision who should sit in it and who shouldn’t.
Yes, if RIL does some underhand dealing with any company, then the govt should catch RIL and demand their share of taxes lost due to hanky-panky.
RNRL was a part of RIL and had every right to use of gas RIL finds. It justr so happened that ANil and MUkesh had a fight and they parted ways.
But, that doesn’t take away the right of RNRL from the gas RIL finds, especially when the parting agreement says so.
Rest is just govt’s ways to fish in troubled water; politiicians, like Police, only try to find ways to make money out of someone’s troubles.
Mukesh is being petty!!
October 31st, 2009 at 2:23 pm
How true… and we all believe that the government, since it is elected by us, would want to work for us… a telling unravelling of democracy in all its glory!
Money and power rules over everything - even the highest powers that be in the country…
God bless!