Monday, July 2, 2012

Will the meeting with Montok Singh change fortune for RIL?

Reliance Industries Ltd , India's largest petrochemical is making all efforts to regain its position of the most influencing company. Meeting of its chairman Mukesh Ambani with Planning Commission deputy chairman Montek Singh Ahluwalia on Monday is part of this exercise. However, the indications are not so positive at this stage. RIL is facing hurdles in getting clearances for its oil and gas exploration projects.

Neither Montok Singh nor Big Ambani spoke to media after an hour long meeting at the Yojna Bhavan. The speculation is that besides the three troubling areas of the MoPnG they discussed about the telecommunication policies as well. RIL has plans to bid for the spectrum auction. Montok Singh is likely to play a bigger role in the government after elevation of Pranab Mukharji. He was finance secretary in the period when Manmohan Singh was the Finance Minister in PV Narsinmha Rao’s ministry.

Before the meeting RIL announced revival of 50 of its petrol pumps in Gujarat. After starting with a bang seven years ago, RIL had shut down 60 of its company-owned pumps stating that it was at a disadvantage since they were not covered under government subsidy. Now, with decontrol on Petrol pricing , there is a level playing field. RIL pumps, now can afford to sell petrol and LPG . If government announces it policy to reduce subsidy on diesel RIL may soon start sell of diesel too from these pumps.

The main agenda for RIL in such a meeting with key people of the government includes a demand for higher gas price from Kaveri basin. Ministry of Petroleum, which earlier had an image of being fully under the influence of RIL, has made a U turn with Jaipal Reddy in charge. In last one and a half year MoPnG has remained very tough with RIL, be that the issue of cost recovery, pricing or the production of gas. All the officials who had soft corner for RIL were shunted out.

Another blow to RIL’s ambitions is the indication that the Oil ministry will reject its proposal to price coal bed methane (CBM) from Madhya Pradesh block at import parity price just as is done in case of oil. The ministry’s technical arm, the Directorate General of Hydrocarbons (DGH), had in April concurred with RIL proposal to price coal bed methane (CBM).

But the ministry wants DGH to review its decision in the light of Supreme Court ruling in the gas row between RIL and RNRL, sources privy to the development said. MoPnG in a letter to DGH wrote, “Allocation of natural gas made by the EGoM (Empowered Group of Ministers) cannot be overridden by a contractor through a private arrangement.”

Jaipal Reddy’s team is tough while writing to DGH,“Supplies of natural gas can only be made in accordance with the policies of the government and subsequent guidelines issued by ministry of petroleum and natural gas on Pricing and Commercial Utilisation of Coal Bed Methane.” New Director General has taken charge of DGH in the month of June only. He has a tough task ahead to please the ministry and defend the stand of its own team.

Yojana Bhawan, the Ahluwalia’s office, is being thronged by industry top brass ever since Prime Minister Manmohan Singh took direct charge of the portfolio. The list of recent visitors includes, Vodafone India chairman Analjit Singh and chairman of UB Group Vijay Mallya and this will expand in the days before monsoon session of parliament.

Ahluwalia is being seen as key policy maker and is considered close to the Prime Minister and being an important functionary in the government. Besides Ahluwalia, Prime Minister’s Economic Advisory Council chairman C Rangarajan too is likely to play more proactive role as the government is struggling to put India back on path of high growth path.

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