Oil ministry stand will erode investor confidence: Anil Ambani

Thursday, 30 July 2009, 10:30 Hrs   |    1 Comments
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New York: The partisan stand adopted by India's petroleum ministry in the dispute over natural gas between two corporate houses will erode investor confidence and goes against the government's reforms direction, industrialist Anil Ambani has said.

In an interview to the Wall Street Journal, Ambani, whose Reliance Natural Resources is fighting a legal battle with brother Mukesh Ambani-led Reliance Industries over supply of gas from fields off the Andhra Pradesh coast, said the oil ministry's position also violated the sanctity of contracts.

"Clearly, the petroleum ministry's unfortunate intervention in a corporate commercial dispute in this manner, if permitted to continue, will erode investor confidence and thwart the government's efforts to attract investments into India," said Anil Ambani.

"In complete reversal to the entire direction of economic reforms being implemented by our respected Prime Minister Manmohan Singh, the petroleum ministry is regrettably pursuing a different path," he charged.

Ambani also said that the oil ministry was seeking a return of the erstwhile regime of command and control, often referred to as the "licence permit raj", when all business decisions had to be authorised by the government on an ad-hoc basis.

He said by intervening in the dispute, the ministry was aiming to re-write a valid production-sharing contract after nearly 10 years, and also seeking to cancel a bonafide agreement between third party corporate entities.

"What then is the sanctity of a contract, which is the fundamental cornerstone of any law-abiding, market-driven economy? And will this not set a precedent, allowing any ministry to alter any contracts in the future at will?" he queried.

"This will also naturally have adverse policy implications for private investments in all natural resources, which are subject to similar considerations."

He said he was deeply concerned by the oil ministry's stand that tantamounts to deciding who should sell gas, to whom, at what price and in what quantity without any heed to commercial considerations or contractual provisions.

Reliance Natural Resources and Reliance Industries are fighting a bitter battle over the price and supply of natural gas from what is called the Krishna-Godavari basin, off the Andhra Pradesh coast.

Last month, the Bombay High Court had asked Reliance Industries to supply 28 million units of gas from the fields to Reliance Natural Resources for 17 years at $2.34 per unit after assigning 12 million units to a state-run power utility NTPC.

But Reliance Industries challenged the verdict in the Supreme Court, which heard the case July 20 and fixed Sep 1 as the next date of hearing. It also asked all parties to file their replies on the government position on the matter by then.
Source: IANS
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