ANIL PUTS DEORA IN GAS CHAMBER

Ambani Junior took the battle with his brother into the corridors of the government. Dhirubhai's second son threw down the gauntlet, savaging his father's friend and launching a scathing attack on the petromin. The outburst marks a game-changing event in Indian corporate history   ANILAmbani on Tuesday launched a bare-knuckled verbal assault targeting Murli Deora, India's petroleum minister and an old friend of Dhirubhai Ambani and Reliance Industries, run by his elder brother Mukesh. Mr Ambani did this in the course of one of the most aggressive speeches ever delivered at a company's annual general meeting. In the course of a riveting oneand-a-half hours, Mr Ambani, who was speaking at the AGM of Reliance Natural Resources (RNRL), castigated what he described as RIL's "dishonourable conduct in... refusing to honour the gas supply contract" and the "exorbitant profits RIL is seeking to make at the cost of the power and fertiliser sectors." But more than that, the centrepiece of his speech was devoted to what he claimed was the "apparently biased and partisan role of the petroleum ministry". Mr Ambani was also scathing in his remarks about a government decision setting a price of $4.20 per unit of natural gas, claiming that the price should not be more than $1.5. It is very rare for Indian industrialists to so openly criticise asenior government functionary or even a corporate rival, let alone with the belligerence displayed by Mr Ambani, the chairman of the eponymous Anil Dhirubhai Ambani Group (ADAG) and among the world's 50 richest men.      "I am bringing out facts which no one has brought out so far," Mr Ambani told ETlater on Tuesday evening. Mr Ambani's speech had four major components: RIL's conduct, Mr Deora's alleged bias, details of the production-sharing contract, which he claims favours RIL, and the inappropriateness of thegovernment-set price of $4.20.      Mr Ambani was blunt in his many references to Mr Deora. "It is evident that the apparently biased stance commenced in 2006, coinciding with changes in the ministry. I am not casting aspersions on the integrity of individuals here — I am sure that they have good reasons for their stance," was one of the most direct accusations.      This is of course not the first time that politicians and businessmen have duelled. Anil's father, the late Dhirubhai Ambani, the founder of Reliance, battled former prime minister VP Singh along with rival industrialists such as Nusli Wadia through much of the 1980s. But the protagonists of these battles rarely spoke in public.      Mr Deora refused to join issue: "I have no comments to make... as the matter is sub judice. All I can say (to Anil) is 'best of luck'." RIL too had no comments. "The matter is before the Supreme Court and sub judice," a Reliance Industries spokesperson said. Harish Salve, a legal eagle who represents RIL, India's largest private sector company by market capitalisation and sales, told ET NOW, this newspaper's business channel, that the Supreme Court would not be swayed by the AGM speech. "Our judges are made of sterner stuff," he said.      At the AGM, the mood was febrile, as some shareholders raised slogans criticising Mr Deora. For the most part though they listened with rapt attention, perhaps aware of the history-making nature of the speech. Most RNRLshareholders also own stocks in RIL from which the company was demerged as part of the Ambani family settlement, which was executed over 2005 and 2006.      The ultimate impact of Mr Ambani's amazing speech remains unclear. Initial reactions from senior leaders of the Congress indicated a certain element of shock and awe, perhaps because of its sheer unexpectedness. SHOOTING FROM THE MOUTH G A S S U P P LY F R O M R I L  Despite the binding commercial agreement that exists between RIL and RNRL for the supply of gas, it is unfortunate that RIL has tried every trick in the book and apparently several outside the book—to back out of its solemn, legal and contractual obligations. We are claiming gas only from RIL's lawful share or its rightful entitlement of production of gas under the PSC. P E T R O M I N ' S R O L E Apparently, the petroleum ministry has used its discretion and not even thought it fit to take the approval of the Cabinet.  It has been brought to my attention that one of the senior advocates of the petroleum ministry, who I have no doubt is a most accomplished person with the highest degree of legal expertise, is the same person who sent a formal complaint to Sebi in October 2007 against the Reliance Power IPO and me personally—it's a different matter that Sebi and the hon'ble Supreme Court allowed the IPO to proceed, over-ruling all complaints. ... the apparently biased stance commenced in 2006, coinciding with changes in the ministry. I am not trying to cast aspersions on the integrity or motives of individuals... I am sure all pvt cos in India wish if they made commercial decisions they wished to get out of, they too had a saviour to help bail them out as is the case for RIL. G A S P R I C E  A GAS PRICE OF $4.2 IS EXORBITANT AND CAN IN NO WAY BE JUSTIFIED  There is no question of RIL suffering a loss—it will still make good profits at $2.34. The problem is it wants to make super normal profits— talk of greed vs. need.  ANIL AMBANI LASHES OUT  I am deeply dismayed by this apparently partisan and biased approach of the petroleum ministry in favour of RIL, which is hurting not just RNRL, but also the government-owned NTPC  Of the initial revenue of Rs 50,000 crore, RIL gets almost all, i.e., Rs 49,500 cr vs. govt's Rs 500 cr. Makes you wonder why the petroleum ministry is pushing so hard for higher gas prices, when 99% gains will go to RIL. THE MOST IMPORTANT WORD FOR SHRI DHIRUBHAI AMBANI WAS  TRUST& THAT WORD HAS, UNFORTUNATELY, GONE MISSINGDeora meets law minister, Pranab on Anil's outburst      THE Congress' battery of official spokespersons declined to comment on the record. However, two senior Congress leaders, one a two-term chief minister of a large North Indian state and the other a member of the Union Cabinet said that the party may have to take a stand because the allegations of favouritism against a senior cabinet minister could hurt the image of the party and the government. Both declined to discuss specifics or to spell out what that stand could be.      Some political observers feel that another empowered group of ministers (EGOM) may have to be set up to resolve the dispute. Mr Deora is believed to be opposed to this. On Tuesday evening, Mr Deora met law minister Veerappa Moily and finance minister Pranab Mukherjee to discuss the day's developments. The outcome of the meeting isn't clear though a source said the ministers had decided to support the petroleum ministry's move to file a special leave petition (SLP) in the Supreme Court seeking scrapping of those parts of the family settlement pertaining to the supply of gas.      In the speech, Mr Ambani referred several times to his father claiming that RIL was deviating from the founder's philosophy. In refusing to execute a bonafide commercial agreement RIL has "no regard for... morality in its headlong pursuit of corporate greed," he claimed.      In the AGM speech, while extensively updating shareholders of Reliance Natural Resources (RNRL) on recent developments of its four-year-old gas dispute with RIL, Mr Ambani said the petroleum ministry's stand was aimed at helping RIL renege on its contractual commitments with RNRL as well as stateowned NTPC.      Mr Ambani lashed out at the petroleum minister Mr Deora in no uncertain terms. "I am sure all private companies in India wish that if they made commercial decisions they wished to get out of, they too had a saviour to bail them out — as is the case for RIL."      He said that he had written a letter on this subject to Prime Minister Manmohan Singh. He was confident that Dr Singh would support the cause of "truth and justice, and ensure neutrality of the government in a pure commercial dispute between two corporate entities." Despite the directness of his speech, Mr Ambani was careful to confine his attacks to Mr Deora.      The legal dispute between RIL and RNRL is now being fought at the Supreme Court, following a Bombay High Court order in June which ordered RIL to sell gas from its Krishna Godavari basin to RNRL for $2.34 per mmBtu for 17 years. This was lower than the government set price of $4.20 per mmBtu. The petroleum ministry had also joined the case in the apex court by filing a special leave petition (SLP) seeking annulment of the gas supply contract between RIL and RNRL. The Supreme Court will hear the case next on September 1. The SLP and crossappeals filed by both sides will come up for admission before the Supreme Court.      "The facts are deliberately being twisted by the oil ministry to say the corporate agreement between RIL and RNRL is a private division of sovereign assets," Anil Ambani said, rejecting the contention that the gas price was set as part of a private agreement between the brothers in 2005.      He also criticised the petroleum ministry's stand that RIL had violated the product sharing contract (PSC) with the government by promising gas to RNRL without informing the government. "Frankly, if the petroleum ministry is genuinely aggrieved... why don't they exercise their powers and terminate the PSC and take back the ownership of the gas fields from RIL when the provisions exist for them to do so?" he asked.      He said the ministry's claim that it was not aware of the agreement between the Ambani brothers was untrue. He said the ministry had been in possession of all relevant details of the gas deal since April 2006 when RIL provided details of the gas pact to the ministry.      He also attacked the petroleum ministry for its claims that the sale price of the KG basin gas was fixed at $4.20 per mmBtu. Drawing a parallel to stamp duty on property, which acts as a reference rate and has no bearing on the actual transaction price, he said $4.20 per mmBtu was fixed for the calculation of the government's share of profit from the gas sale.      Also, he emphasised that the government would not lose money if RIL sells gas at a lower price of $2.34 per mmBtu, as directed by the Bombay High Court in June. Under the PSC, 99% of all revenues and profits would go to RIL and the remaining 1% to the government in the initial years. Of the initial revenue of Rs 50,000 crore from the gas sale, RIL will get Rs 49,500 crore, he said." Makes you wonder why the petroleum ministry is pushing so hard for higher gas prices, when 99% gains will go to RIL," he said sarcastically.      According to him, NTPC is also affected by RIL's machinations. NTPC has been fighting a separate legal tussle to obtain gas from RIL's KG D-6.      Giving details of the global gas scenario, he said the price of the industrial fuel had crashed 80% and the gas price of $4.2 per mmBtu (fixed by the government) was "exorbitant" and against public interest.      The ministry's role runs counter to the view of others in the government that it shouldn't play any role in price-setting, Mr Ambani said.      "The petroleum ministry has unilaterally gone ahead and taken a stand, which runs contrary to that of the cabinet sub-group, apparently without even consulting it, even though that group represented the broader collective wisdom of several other ministers, including the ministers of finance, law, power and fertilisers," he said on Tuesday.      Anil Ambani said Reliance Industries is seeking an exit from its obligations. "It is unfortunate that Reliance Industries has tried every trick in the book and apparently several outside the book to back out of its solemn, legal and contractual obligations," he said.