The natural gas dispute between the warring Ambani brothers has taken so many unexpected turns and has involved so much lobbying by both sides that it is hard to separate fact from fiction.
The endgame seems to be near, with a Supreme Court bench scheduled to decide on the issue in September. The government has been drawn into the battle. Its latest position is that natural gas is a national resource that is being extracted by Reliance Industries as a contractor. The firm has no right to decide whom it can sell the gas to and at what price. Critics have been quick to point out that this argument is advantageous to Mukesh Ambani in his long dispute with brother Anil Ambani; it allows him to parachute out of the private agreement that the younger brother is using to demand gas at a price which is 44% below what most other users will pay. But we have another concern. The government is essentially saying that it will now have the final word as far as pricing and distribution of natural resources go. “Natural gas belongs to the government and is a public asset like uranium or coal or iron ore,” said oil and gas minister Murli Deora in a recent interview to The Times of India.
Would this mean that the government would use the same principle in the case of other non-renewable natural resources?
Illustration: Jayachandran / Mint
Take the case of iron ore. There was a very public spat between India’s iron ore miners and steel companies a couple of years ago. Iron ore was being shipped to China to feed the steel mills there. Indian steel companies said they should have preferential access to this iron ore while the mining companies said stopping iron ore exports to China would put hundreds of thousands out of work. The policy debate was whether ore exports should be taxed to make them less attractive. There was no talk of the government intervening directly as the owner of national resources.
Telecom bandwidth is not a non-renewable resource but the laws of physics restrict its supply. Telecom companies lease this bandwidth from the government. Would it, too, be treated like natural gas—say, with the government telling telecom companies what to do with the bandwidth they rent from the government?
These are complex debates that need expert advice and should be delinked from corporate interests. But it is likely that what seems to be a new policy on natural resources could open a Pandora’s box in the future.
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