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The corporate feud between two of the country’s biggest private players, Mr Mukesh Ambani and his younger brother Anil, seems to have spilled over to the national political domain in the run-up to the Congress-led UPA government’s vote of confidence in a special session of the Lok Sabha during 21-22 July.
Against the backdrop of Samajwadi Party leader Mr Amar Singh’s consistent demand that the Centre should impose “windfall profit tax” on private oil players allegedly making a killing out of the continuing rocketing of global oil prices and that the government should also ban their exports, the Reliance Industries head, Mr Mukesh Ambani, today met Prime Minister Dr Manmohan Singh and a slew of top government functionaries, including Cabinet secretary Mr KM Chandrasekhar, to impress upon them why such demands were “bad economics”.
Soon after extending the support of his party (39 MPs) early this month to the Manmohan Singh government, Mr Amar Singh has been persistently carrying on this campaign, writing letters to the PM, meeting top officials and even the PM. While gunning for Mukesh’s Reliance, which is the biggest private oil company, and questioning the Export Oriented Unit (EoU) status given to its Jamnagar petroleum refinery, Mr Amar Singh has charged that at the expense of state-run oil companies private players are making a windfall profit by $15 dollars per oil barrel since they are not bound by the government’s subsidy regime like their PSU counterparts. According to Mr Singh, if the windfall tax on private companies’ staggering profits are levied, the government would be able to mop up an additional revenue of Rs 100,000 crore ~ enough to offset the global oil price spike.
Mr Mukesh Ambani is believed to have told policy makers that fiscal revenue gain from a Windfall Profit Tax would be short-term in nature at the cost of long-term economic costs.
In this connection, Mr Amar Singh also criticised petroleum minister Mr Murli Deora, considered close to Mukesh Ambani, charging that he has been conducting himself like a “corporate honcho and a Union minister of private refineries”. Mr Amar Singh has also attacked the government for being allegedly indulgent towards GSM private telecom players like Airtel. Anil Ambani’s Reliance Communication is a CDMA player wishing to enter the GSM arena. Mr Singh is known to be close to the younger Ambani brother.
Amid this corporate lobbying and counter-lobbying, the Congress sought to delink it from the current political crisis. “They are in public domain, but they are not in the form of any veto or pressure tactic; the GOI will take its own decision…,” said AICC spokesman Mr Abhishek Singhvi.