Can't let Sistema investment be thrown in abyss: Russia

In a veiled threat, Russia has hinted at Indian investment in its oil and gas fields getting impacted in the wake of problems its telecom major Sistema faces here due to the cancellation of its 2G licences.

"There can be no investment from the Indian side (in Russia) if such things happen to our investment here. It takes two to tango, you know," Russian Ambassador to India Alexander M Kadakin said.

He referred to investments by Indian firms, particularly ONGC Videsh Ltd's over USD 2 billion investment in the Far East Russian oil and gas field of Sakhalin-1, as "shining examples" of Russia welcoming Indian investments.

Kadakin said Moscow will not let USD 3.1 billion Sistema invested in its Indian telecom venture go waste due to "internal problems" here.

"The Russian Government will never allow USD 3.1 billion just be thrown into abyss. This must be understood. This is also (Russian) tax payer's money. The share which government holds. It is about USD 1 billion," Kadakin said in an interview to CNBC TV18. "We are not to throw our money, USD 3.1 billion, into the inferno because of your internal political problems," he added.

Sistema holds 56.68 per cent stake in Sistema Shyam Teleservices Ltd, whose 21 out of 22 licences were cancelled by the Supreme Court in February on the grounds that the 122 permits issued by the then Telecom Minister A Raja were 'arbitrary and unconstitutional'. The Russian government holds 17.14 per cent stake in SSTL.

"It is not only judicial problem but political problem (also)," he said.

SSTL acted in "strict accordance with all laws and regulations of India and bought the license for the frequencies, not claimed by anyone", Kadakin said. The matter has more "political content" than "judicial content", he added.

"Being bona fide buyer of licence, we were thunderstruck when the whole thing all of a sudden changed here in India and all those licences were pronounced invalid," he said. "I feel the problem is...I mean the judicial and other authorities, they did not make distinction between our company, which was a bona fide buyer."

Stating that SSTL's MTS brand has added 16 million customers, Kadakin said Russia would "watch very closely how the situation unfolds in the coming months, even days."
He said leaving India altogether was an option "but we do not want it".

"We do want investment cooperation between the two countries to flourish and develop. Please understand that we welcome India's investment in Russia, especially in hydrocarbons, oil etc," he said.

Sistema has also been opposed to high minimum price being recommended for auction of airwaves freed by the cancellation.

The company has earlier said that it will exit if the minimum price is not brought to the level which its Indian partner paid, around Rs 1,650 crore, to get telecom licence in 2008. It argued that the final price of airwaves should be determined through market demand.

Meanwhile, sources have indicated that a ministerial panel may recommend minimum price in the range of Rs 14,000 crore to Rs 16,000 crore for 2G GSM spectrum and SSTL will have to pay 1.3 or 2 times of this price to buy airwaves.

Kakadin said that there are three options that Russian side has with first being to "just altogether leave India".

"We are not for first option. We are not for second option of international arbitration. We have a bilateral agreement on safeguarding mutual investments, which is also in force. International agreements takes precedence over domestic laws," he said.

The Russian side prefers that the issue should be resolved amicably, he said. "We would like to have third option - to continue cooperation and to resolve this sudden problem in a friendly manner," Kadakin added.