Patronage and power games

Patronage and power games
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First Published: Sun, Aug 17 2008. 11 51 PM IST

Illustration: Jayachandran / Mint
Illustration: Jayachandran / Mint
Updated: Sun, Aug 17 2008. 11 51 PM IST
Is the Samajwadi Party (SP) getting its pound of flesh for helping the United Progressive Alliance win the trust vote? That can well be the impression, considering how two recent government decisions affect the SP’s friend Anil Ambani. A closer look shows how government policies leave enough latitude to offer political patronage.
Illustration: Jayachandran / Mint
The first issue is the fate of surplus coal from the mines in Singrauli, Madhya Pradesh (MP), allotted to the Reliance Power-promoted Sasan ultra-mega power project. A Union cabinet decision last week now allows Reliance Power to direct it to its Chitrangi power project in MP.
The coal ministry had earlier said that Reliance Power could use coal from the mines only to fuel its Sasan project — but there has been ambiguity on this from the outset. Indeed, Lanco, the original winner of the competitive bid, had claimed that it felt surplus coal could be sold, and had pointed out that the estimated reserves in the captive mines were significantly more than needed for Sasan. Reliance Power subsequently got the project after lowest bidder, Lanco, was disqualified. Interestingly, Reliance Power had to match Lanco’s bid in order to win the project. Strictly speaking, if the lowest bidder is disqualified, there is little reason to recognize his bid and set a benchmark with it. Was it then a case of political vendetta? The Congress was then at loggerheads with the SP.
That Reliance Power matched the bid goes to show its aggression, driven by its valuation of the project, a key to which is the coal riches. The mines have attractive quality and volumes of coal. Now, existing policy ambiguity is helping Reliance Power. The power minister’s rider, “If there is any surplus coal, it can be used for other projects, provided they supply power on a tariff reached through competitive bidding,” doesn’t hold as the Chitrangi project was bid on different terms than Sasan and its tariff is much higher.
The second is that of the 3G spectrum allocation policy that recently set differential terms. It introduced the auction route for GSM players, while for CDMA services, it said the player with the largest subscriber base would get the scarce spectrum. This happens to benefit Anil Ambani’s Reliance Communications. It was only after it faced stringent public criticism for something so obvious that the telecom ministry has now said if the contention is that an operator would have a monopoly, it will ensure a level playing field and revise the guidelines. This reaffirms the perpetuation of loophole legacies — the ministry has been in the thick of controversies each time new markets had to be opened up, whether wireless in local loop several years back or the more recent expansion of 2G services.
It is the government’s weakness in policymaking that spells nemesis when it comes to lobbying and political bargaining.
Is the Samajwadi Party getting its pound of flesh from the UPA? Write to us at views@livemint.com
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First Published: Sun, Aug 17 2008. 11 51 PM IST