The government has challenged the very substance of the two-Ambani agreement befor the apex court. It has raised a host of strong policy issues having long term ramifications on the pricing, allocation and distribution of petroleum and gas to user industries by their producers. If the government plea is upheld, the original agreement between the two Ambani brothers or their companies becomes practically infractuous. As an immediate consequence, it will help the elder Ambani wriggle out of the commitments he has made to younger Anil with regard to the supply and pricing of KG basin gas to the latter's thermal power company, Reliance Natural Resources Limited (RNRL), making Anil sulk at least for some time.

In the long run, however, Mukesh Ambani's off-shore oil and gas enterprise, part of RIL, itself may become more vulnerable to the vagaries of government decisions on allotment, distribution and pricing of its products. In that case, RIL may be at the receiving end surrendering its authority to the minister and bureaucrats in the ministry of petroleum and gas. The government intervention into such business decisions will certainly have a bearing on the top line and bottom line of all enterprises in the field of oil and gas, including Mukesh's RIL.

If the Supreme Court judgement upholds the government plea, it may also have even a much wider impact on all those industries which are using such scarce natural resources of national importance as ground water, coal, iron ore and other minerals. The proposed privatisation of coal mining may become less attractive to investors if the latter has no right to enter into business deals concerning allocation, distribution and price fixation of the mineral. Water-based industries could be in deep trouble as the government may restrict their operation and fix levies and taxes on the exploitation of ground water for commercial use.

Yet, generally speaking, such a ruling is most welcome if it is truly intended to protect the interest of the people of the country, who can't be held hostage by greedy corporations wanting to exploit the important scarce natural resources for big money. The ruthless ambitions of the Ambani brothers, their business belligerence, awesome financial muscle, political connections and ability to manipulate the regulatory system should serve as an eye opener to the society and the entire nation. And, in the current context, it may not be wrong to even surmise that the Ambanis have invited the situation as the government's independent petition before the apex court points out.

The government, in its appeal filed before the Supreme Court, clearly said that the Ambani brothers have no private right over the natural gas from the KG basin, which is a national asset meant for the country's economic progress and industrialisation. It demanded that the agreement between the two Ambani brothers be declared 'null and void.' Although RNRL objected to the petroleum ministry's latest stand on the issue alleging that it was meant to favour RIL in the backdrop of the Bombay High Court ruling, the case in which the government played only a passive role, the apex court has admitted the government petition. The court has asked the two companies to file before it their separate objections to the government's contention and plea for the rejection of the MoU between RIL and RNRL on the gas sharing and pricing.

While the resolution of the issue may take some months, the government's basic stand that it is the sovereign owner of the country's hydrocarbon asset and lease holders can't treat it as their private property is unlikely to be disputed by the apex court. The three key industrial users of natural gas are: power generation industry, fertiliser and petro-chemical producers. Of these, the first two are directly linked with the country's energy and food security. India's hydrocarbon reserves are limited and the present rate of extraction meets less than 25 per cent of its demand.

An allocation, distribution and price control by the government over such an important and scarce natural resource is highly desirable in the national interest. And, it is expected that the government will not misuse its power to favour one enterprise against another and the least of all, the sovereign right be used as a political tool to penalise entrepreneurs who are not politically aligned with a ruling party or group. The best the government can do to ensure fairness in its hydrocarbon policy is to fix a uniform formula for its allocation, distribution and price fixation which will apply to all producers, public or private. Once it is done, a producer will be free to strike business deals with any party or parties of its choice to secure best commercial advantage. The government must not intervene into such agreements using its sovereign right 'until the delivery point.'

The country has witnessed the misuse of the 'licence-control' regime by the government and the politically-connected business families for many years, all in the name of 'national interest.' The practice was corrupt and obnoxious, as well. It must not be allowed to make a come-back, courtesy the union ministry for petroleum and gas, or, for that matter, by any other ministry. (IPA Service)