Corporate hand

Published : Aug 01, 2008 00:00 IST

SAMAJWADI Party leader Amar Singh carried two letters with him when he, along with his party chief Mulayam Singh Yadav, made a formal visit to Prime Minister Manmohan Singh in order to cement their new-found friendship.

The letters had a few specific demands relating to the Ministries of Petroleum and Communications. One of the demands was the withdrawal of export-oriented unit status to private petroleum refineries. The other was a ban - at least during the present period of economic crisis and petroleum shortage - on the export of petroleum products. There was also a proposal to levy a windfall tax of 20 per cent on profit-making private sector petroleum companies.

The demand pertaining to the Communications Ministry was to come out with an open policy for easier availability of spectrum to telecom companies. It also contained a suggestion to charge a onetime fee from GSM operators as per the market rate for spectrum held by them beyond 6.2 MHz.

Amar Singh insisted that he was making these demands to provide some relief to the common people. However, observers believe that corporate dimensions of the political play between the Congress and the S.P. have once again come to the fore. In the past three years, the Congress and the S.P. have virtually taken sides in the corporate battle between the Ambani brothers, Anil and Mukesh Ambani.


Amar Singh's demands relating to the petroleum sector were literally prayers to take away the concessions given to Mukesh Ambani's Reliance India Limited (RIL), which has been accorded the status of an export-oriented company. This, along with the many other concessions that the company got, helped it make a profit of Rs.10,372 crore in 2007-08 from the refining business. The company has not paid any tax on this profit. Amar Singh's demand for imposition of a windfall tax acquires special relevance in this background.

He also took on Murli Deora and accused the Petroleum Minister of functioning as a "corporate honcho" of RIL. According to him, Deora should not have accepted the petroleum portfolio because of his wellknown connection with Mukesh Ambani. "He is so close to Mukesh Ambani that Mukesh calls him Uncle Murli. I am not asking for Murli's resignation but he should think in the same direction [as I do]," Amar Singh told Frontline.

Amar Singh said he was being misunderstood even though he was acting in good faith and with political responsibility. "The demand to withdraw export-oriented status is one that CPI(M) general secretary Prakash Karat has also made. Why is it that the demand becomes propagation of corporate interests of Anil Ambani when I make it and is treated as advancement of principled politics when others raise it? If I say something about spectrum, it is immediately attributed to my friendship with Anil Ambani. But if Murli says there's nothing wrong in private oil companies making windfall profits, then no one talks about his friendship with Mukesh Ambani," Amar Singh pointed out.

The fight between the S.P. and the Congress had this corporate dimension when Mulayam Singh Yadav, as Chief Minister of Uttar Pradesh, sanctioned "the world's largest pit-head power plant at a single location" in Bejhera Khurd village near Dadri in Ghaziabad district. The project was granted to the Anil Ambani-led Reliance Energy Generation Ltd. (REGL), but it never took off on account of the agitations led by former Prime Minister V.P. Singh and his associate Raj Babbar, questioning the process of land acquisition for the project. The government was accused of favouritism to REGL. The S.P. leadership branded the agitation a fissiparous exercise motivated by Mukesh Ambani.

The Dadri project and the controversies generated by it were perceived by a large number of industry-watchers as the trigger for the split in the then undivided Reliance group. The days following the announcement of the Dadri project saw Anil Ambani's election to the Rajya Sabha - on June 26, 2004 - from Uttar Pradesh with the backing of the S.P. and the aggravation of his problems with Mukesh Ambani. The differences between the brothers led to the split in the Reliance empire in March 2005.

The struggle continued after the split. S.P. leaders alleged that during the tenure of their government there was a conspiracy hatched by Triple M, namely Murli Deora-Mukesh Ambani-Ministry of Petroleum, to scuttle an ambitious project. The present tussle seems all set to continue from the earlier ones.

Deora has come up with the defence that the area of taxation fell under the domain of Finance Minister P. Chidambaram, while a decision on the status of export-oriented units came under the purview of the Commerce Ministry. Indications from the government are that it would be difficult to accept the S.P. demand to revoke export-oriented status to RIL.

Venkitesh Ramakrishnan
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