Not just private

It is wrong to view the acrimonious fight between the two Ambani brothers over the supply of natural gas from the Krishna-Godavari basin, which has moved from the Bombay high court to the Supreme Court, as only a private dispute between two corporate houses. Public interest is involved in the case as the allocation of a scarce natural resource and its pricing are at the crux of the dispute. The high court had upheld the claim of Anil Ambani for gas at a price agreed upon in a family MoU but which is lower than the floor price approved by an empowered group of ministers. Mukesh Ambani is unwilling to sell gas at that price. The high court also had, and now the Supreme Court has, unwisely, suggested arbitration or mediation to settle the dispute.

But mediation between two private parties cannot decide on the  use of public property. The issue also goes beyond the legal status of the MoU signed between the two brothers. There are public sector companies which are among the user industries. The government has much to answer for the mishandling of issues in the natural gas sector. Petroleum minister Murli Deora has said that the government would protect public interest in regulating the use of gas and its allocation. But he himself and senior officials in the ministry have been accused of partisanship on the issue.

The government’s policy on pricing and utilisation of natural gas has been defective and non-transparent. International norms and practices were not followed and therefore the price fixation was wrong. The allocation policy has been subjected to frequent ad hoc changes from time to time. Lack of consistency has imparted uncertainty to the scenario. Natural gas is an important resource. Exploration is capital and technology-intensive, and there will be need for participation by the private sector. But private players will not be interested in the venture if there is no clarity on policy and authorities are vulnerable to lobbying. That is why a recent auction of oil and gas blocks did not evoke any good response. The lack of enough number of interested parties can lead to a situation in which a few players will seek to control the field. That will hurt the ultimate consumers, whether they are in the private or the public sector. These wider interests should not be held to ransom by a fight between two companies.