By R. Sasankan
A recent newspaper headline screamed: “Petroleum ministry trying to scuttle Aramco-RIL deal”.
Sobriety in news reporting has gone out of fashion: a lot of it is
fevered speculation, often tinged by outrageous comment from so-called
analysts. Don’t blame the reporters; most have no access to credible
sources of information and, therefore, have to rely on what once used to
be classified as Bazaar Gossip. But speculative frippery has now
cloaked itself with dignity in venerable newspapers simply because
authentic sources of information have all but dried up. The government
and its ministers will not entertain reporters; news gatherers have to
scuff their shoes on sidewalks hoping to grab a sound bite or two from
any officious-looking functionary no matter how low down the pecking
order he or she might be. On a bad day, all they can do is call a
dial-a-quote analyst to buttress any headline-grabbing point that their
editors want them to chase, no matter how far-fetched or outrageous it
might be.
So, the story beneath that screaming headline said: “While Prime
Minister Narendra Modi and the entire leadership are "encouraging"
business to invest in the country with "ease of doing business" reforms,
the Petroleum Ministry appears to be using the media to scuttle the
Saudi Aramco-Reliance Industries (RIL) deal”.
On
the face of it, the report sounded incredible. However, I decided to
dig a little deeper and discovered that the leadership in the petroleum
ministry under Dharmendra Pradhan hasn’t done anything to undermine the
policies of Prime Minister Narendra Modi. Analysts have made unfounded
inferences from some of his statements and action and suggested that he
may be working at cross-purposes with the regime’s agenda.
Stated baldly, Pradhan remains totally committed to the Prime Minister
who elevated him to the cabinet rank. He is known to enjoy good
relations with the leadership of Reliance Industries as well. But that
personal equation will not persuade him to refrain from torpedoing RIL’s
interests if either Mr Modi or home minister Amit Shah wants him to do
so.
Aramco’s deal to pick up a 20 per cent stake in RIL’s oil-to-chemicals
division for which a non-binding letter of intent was signed on August
12 has run into problems with the government seeking court’s
intervention to restrain RIL from selling its assets. The controversy
stems from the government’s determination to enforce its claim to profit
petroleum from the sale of oil from the Panna-Mukta-Tapti fields in
western offshore which were being operated by the BG-led consortium in
which RIL and ONGC were partners. The dispute over the government’s
claim has been before an arbitration tribunal. RIL says the Tribunal has
not given the final award but the petroleum ministry has argued that
the interim award is enough justification for it to go to the courts to
enforce its claim.
Mr Modi had never acted in a manner to hurt RIL’s interests during his
first term that began in 2014. In fact, his government’s decision to fix
a higher price for domestically produced natural gas from deep water
fields and other difficult operational areas went very much in favour of
RIL. This is believed to be the highest price for domestically produced
gas anywhere in the world.
The Modi government is deeply annoyed with RIL—and this was evident from
the way it argued its case in the Delhi High Court while seeking to
restrain the sale of the assets of BG (now Shell) and RIL. It argued
that RIL already has a debt of Rs 2880 billion and the sale of assets
would make it difficult for the country’s largest private conglomerate
to pay the estimated Rs 320 billion on account of the arbitration award.
It
was Modi who took the initiative in inviting Saudi Arabia to invest in
India. For long, the Middle East majors have shied away from the Indian
market. Even Aramco at one stage was keen to limit its investment to
just a minority share in one of the existing refineries. The Saudi
petroleum giant’s sudden decision to invest in a 60 million tonne mega
refinery in the state of Maharashtra came as a huge surprise. But it was
after all a prestigious project for the Modi government which has been
to drum up foreign investments into the country. But the subsequent
agitation against the preferred location for the refinery and the
resultant delay was a big blow to the BJP government in the state.
The question that everyone asked was this: Did RIL play a role in
whipping up the agitation against the refinery? No one has made such a
severe allegation against RIL. It is possible that the BJP suspects that
if Aramco-RIL deal goes through, the Saudi giant may decide not to go
ahead with the mega refinery. RIL always enjoyed excellent relations
with the Saudi palace. The government’s Income Tax department has gone
on record stating that it “exchanged information regarding members of
the Mukesh Ambani family over alleged undisclosed foreign income and
assets in a quarterly meet this month in Ukraine with seven countries
that India has agreements for sharing tax-related information on
citizens.” This makes it possible for the income tax department to
source information on the bank accounts held by Indian citizens in those
countries.
A close examination of the sequence of developments creates an
impression that the Modi government is gunning for RIL. But it may have
its own reasons for doing so and which it is not obliged to disclose to
anyone.
A corporate house is reported to have played a key role in the latest
political developments in Maharashtra that led to the formation of the
Shiv Sena-led government. But which corporate house was it? It is
certainly not the Tatas or the Mahindras. No one has identified RIL
either – and probably never will be. But in the corridors of power,
whispers can cause a lot of damage. Moreover, Mr Modi and Mr Shah depend
a lot on the dope that the government’s Intelligence Bureau provides.
Prime Minister Modi and home minister Amit Shah can be vindictive if
they are convinced that someone has deliberately scuppered their party’s
interests. Unlike other corporate houses, the Ambanis do not give in
easily. Since the days of patriarch Dhirubhai Ambani, they haven’t shied
away from fights. Mukesh’s RIL enjoys tremendous clout with almost all
political parties and the country’s bureaucracy including the IT
department. The Ambanis are known to be generous with their hand-outs.
A compromise cannot be ruled out. Politicians and businessmen hailing
from Gujarat are not averse to striking mutually beneficial deals. Even
the Congress party did that. During the UPA days, petroleum minister
Murli Deora, a politician believed to be a prominent supporter of RIL,
suddenly opted for a transfer from the ministry of petroleum and natural
gas and was succeeded by Jaipal Reddy. The mandate Reddy got was to
weed out pro-RIL elements in the ministry and act against the
Ambani-owned conglomerate. Even as Reddy started to act, RIL managed to
stage a coup by replacing Reddy with Veerappa Moily. Will history repeat
itself?
Modi cannot antagonise Aramco. Probably, Aramco will have to take the
leadership into confidence and underscore that its business ties with
RIL will not stand in the way of already committed investments in other
projects. The situation calls for joint efforts by Aramco and RIL.
Political observers reckon that the BJP leadership may not settle for
anything less than the Shiv Sena’s return to its fold in Maharashtra.
RIL is capable of facilitating such a development. But the political
situation in the country is changing so swiftly that RIL may not be in a
hurry to negotiate an immediate patch-up between the warring political
parties.
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