New Delhi: The gas dispute between the Ambani brothers is hurting global investors' confidence in India, says an industry report, urging the government to set priorities for the usage of gas and the pricing to prevail.
The report in a US-based monthly magazine Energy Tribune says the Indian government owns the natural gas resources at stake in the Ambani dispute.
"The government-set price must prevail to continue to provide an attractive domestic business environment, increase domestic energy supply and strengthen global energy security," Energy Tribune editor-in-chief Michael J Economides said in the report.
Anil Ambani is seeking to enforce a family agreement that
gives his group firm RNRL natural gas from elder brother
Mukesh Ambani-run RIL at USD 2.34 per mmBtu, 44 percent lower
than the government approved rates. The case is now in the
Supreme Court.
"As other economies around the world start to regain
their confidence in global markets, investors are again
beginning to look for new places to build companies, create
jobs and facilitate new social development. Yet, the current Ambani brother dispute seriously hurts investors' confidence in India, and that spells danger for future generations in India who will need a greatly-expanded energy supply to power their dynamic economy," the report stated.
The history of successful developing nations suggests
that a strong government hand in setting clear rules for the
market is critical to long-term economic development.
Effective governance requires that private actors not be
permitted to undermine the integrity of sensible law. As such,
the Indian government should use this opportunity to step in
and ensure a smooth functioning marketplace, the report said.
Moreover, the legal battle continues to lock up abundant
and affordable energy, while 400 million Indians remain
without what is considered a basic necessity in most developed
countries - electricity.
"The government must maintain as its number one priority
the advancement of its citizens' welfare by ensuring a
smoothly functioning market," the report said.
It said the Indian government needs to ensure a price
that accounts for the true cost of production and development
which will enable the country's growing energy market to
attract investors and develop over the long term.
A successful settlement, it said, of the suit would open
up abundant and affordable energy that is presently
threatening businesses and power supplies, and increase the
domestic and foreign investment that has been stymied by the
Ambani disagreement.
"Millions of Indians would improve their daily lives in
the process," the report added.
Elaborating on the necessity of energy development in
the country, the report pointed out that it is vital for not
only the country's energy security but also for international
security.
"Currently, though, the natural gas dispute between
Mukesh and Anil Ambani over the memorandum of understanding
(MoU) brokered by the brothers' mother in June 2005 is marring
efforts to expand India's clean energy reserves, to the
detriment of consumers, businesses and investors alike,"
Economides said.
Bureau Report
First Published: Friday, September 11, 2009, 14:33