Friday, March 18, 2011

Petro Intelligence » Ambani Siblings Shun ‘Uncle’

Shun ‘Uncle’

Nanmohan SinghUncle Murli has finally been shunted out of the petroleum ministry and he may have good reason to blame his nemesis: Anil Ambani. The younger scion of the Ambani family and Murli Deora – fondly called Uncle by the two siblings because of his close relations with patriarch Dhirbubhai – had fought a pitched battle through the second half of 2009 over the messy Krishna-Godavari gas dispute.

Murli DeoraDeora’s avuncular relationship with Anil Ambani was destroyed when the former petroleum minister had clawed his way into what was until then a battle between the Ambani brothers. But the Uncle blatantly backed older sibling Mukesh – and won a crucial battle before the Supreme Court last May after asserting that the gas belonged to the government and wasn’t a piece of private property that siblings could fight over.

Anil’s challenge wilted in the face of such an overwhelming argument and he lost the battle after winning three unequivocal decisions in his favour from the Bombay High Court. Although Anil lost the battle, Mukesh did not win it. The government was able to assert its control over all the natural gas resources in the country and reduce the status of all oil and gas explorers to mere contractors under the terms of the production sharing contracts signed with them. The contractors were stripped of the right to decide who they could sell the gas to and at what price.

Anil AmbaniMurli Deora’s sudden and unexpected exit from the high-profile ministry hadn’t been anticipated and became the focal point of discussion in the minor reshuffle of the Manmohan Singh-led UPA ministry on January 19.

Deora had held the petroleum bailiwick for just over five years, making it the longest stint by any one in a ministry that has often been dubbed as the graveyard for politicians. Many are terming Deora’s unexpected exit – along with his junior Jitin Prasada — as Anil Ambani’s sweet revenge.

No one had an inkling of Deora’s exit, not even the senior officials of the ministry of petroleum and natural gas. The hapless minister was taken into confidence at the eleventh hour but his desperate attempts to stall it did not succeed. Deora is considered a heavyweight politician not on the strength of his mass base but over his legendary capacity to fatten the party’s coffers before any election.

V.K. SibalWhen Murli Deora was installed as petroleum minister five years ago, the popular perception was that Mukesh Ambani’s Reliance had a major say in his appointment. He remained grateful to Reliance until a few months ago. The irony is that Deora’s rise and fall is inextricably linked to the fortunes of Reliance Industries. If Mukesh Ambani used his influence to shepherd Deora into the petroleum ministry, the brouhaha over the whopping capital expenditure proposed and approved for the KG-D6 gas block has precipitated his equally rapid exit.

The Comptroller and Auditor General – which goes by the acronym CAG – has proved to be a nightmare for Manmohan Singh in his second stint as Prime Minister. His government has been rocked by a barrage of revelations relating to scams and pernicious influence-peddling in the highest offices of the land.

There’s another one that is brewing and Singh cannot run the risk of being seen as a person who merely twiddles his thumbs in the face of adversity. The tentative finding s of the CAG on the capital expenditure on KG-D6 are reportedly devastating. The final report may not trigger the type of political controversy that the CAG report did in the case of 2G spectrum allocations because Reliance has friends in all political parties including the left. However, it has all the markings of a big scam.

M.S. SrinivasanThere are no indications that Mukesh Ambani came to Murli’s rescue when the Prime Minister decided to shift him out of the petroleum ministry. In fact, reports suggest that Reliance was not unhappy over his exit. But the truth is that even if Reliance tried, the Prime Minister would not have relented. Obviously, no outsider could have influenced the appointment of Jaipal Reddy in the petroleum ministry. Reddy enjoys a fairly clean image. Political leadership acts when the situation seems to be going out of control. The controversy over the capital expenditure at KG-D6 was triggered by the Anil camp. The first victim of this campaign was upstream regulator V.K. Sibal who was shown the door even though he had two years to go before his retirement.

If Murli and Sibal are guilty of lapses, as is being speculated, former petroleum secretary M.S. Srinivasan cannot escape the blame. A damaging observation by the CAG with respect to his role could wreck his chances of securing a gubernatorial assignment – a position that he has trained his sights on.

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