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Crony Capitalism and The Ambanis

Crony capitalism, as a term is coming in full swing due to the disproportionate distribution of wealth.

It merely manifests the ties between the government and corporations to gain high profit and secure their position.

In this book, you’ll find out more about the economic struggle and utilization of India’s natural resources.

Who Should Read “Gas Wars”? And Why?

Well, we don’t believe that this book will be a good fit for the larger audience. That’s partly because of the complex terminology, but also due to other factors, such as willingness to explore the corporate myths.

In other words, “Gas Wars” is recommended for anyone who wants to delve into the secrets of the Indian crony capitalism.

About Paranjoy Guha Thakurta and Subir Ghosh

Paranjoy Guha Thakurta is an Indian journalist, author, and a documentary filmmaker born on October 5th, 1955.

As a member of the Press Council of India, he was given the authority to get a glimpse into the paid news, which infested the country’s politics.

Subir Ghosh is also a journalist born on September 7th, 1966. He has expressed great interest in environmental and human rights.

“Gas Wars PDF Summary”

Every Indian has a rough perspective on the vast disparity that exists between the upper and lower class. It’s estimated that approximately 25% of the Indian population lives below the poverty line. This is a huge defeat for a socialist country, such as India.

To better illustrate the problem, we turn our attention over to Dhirubhai’s two sons – Mukesh and Anil. For those that don’t know them, they are one of India’s wealthiest and most influential individuals with a combined net worth of over $40 billion.

As legitimate wielders of industrial power, they control much of India’s gas and power sector. Following their father’s death in 2002, RIL or Reliance Industry Limited was starting to fall apart. In an interview, Mukesh admitted to having ownership issues with his younger better.

This unfortunate turn of events divided the conglomerate into two billion dollar corporations: Reliance Industry Limited and Reliance Group – founded in 2005. According to the author, their somewhat different personality and character only added to the demerger.

Between November 2004 and June 2005, the Ambani brothers resisted one another, which marked the beginning of an all-around economic, social and political struggle.

RIL couldn’t hold for much longer, and that same year split into two. Anil took control over the power generation empire, while Mukesh focused on the oil and gas exploration. Their fight was far from over.

Three years later, in 2008, Mukesh using the “right of first refusal” disavowed the deal Anil-led Reliance Communications and the South African Telecommunications group – MTN.

They started arguing on many topics, and their debate turned into a live one. At first, they tried to keep this issue to themselves, but things got out of hand and ended up in the Bombay High Court. The main matter of contention was the dominance over KG gas and the pricing.

On 15 June 2009, the Supreme court ruled in favor of Anil, but the battle continued. With the conglomerate parceled out 4 years earlier, the verdict included counts which urged Mukesh to honor the terms of the agreement, because otherwise, he’d risk arbitration.

Reliance Group put up a fierce resistance by launching a media campaign in which they attempted to discredit both RIL and the Indian government. He believed that the petroleum ministry gravitated towards Mukesh, and not him.

Anil demanded that the Supreme Court should review the case and reconsider their decision. To some degree, Mukesh won this battle, but the Supreme Court issued an act, according to which – the pricing of natural resources should be enforced and adequately monitored by government officials.

In 2010, the Indian government realized that the gas industry is crucial to the Indian economy, therefore they are allowed to interfere in all matters of interest. In layman’s terms – the conglomerates are not allowed to sell too cheap, or unreasonably high.

The truth behind the KG Basin

In 2010, Atul Chandra (Head of Operations at RIL) expressed grave concerns about the price of deepwater gas, $4.2 per mBtu. According to him, the only solution would be an increase due to the risk incorporated into the process.

K. Srivastava (the Director General of the Directorate General of Hydrocarbons) countered these assertions by hatching a plan for reaching 60 mscmd of natural gas quote by April 2011. The plan failed because not all of the 22 wells were in motion.

RIL attempted to cover this loss by exploiting the KG-D6 fields, but then again – the deficit remained an issue. The government, on the other hand, was compelled to undertake a procedure regarding the problem and find a permanent solution.  

Sudini Jaipal Reddy (Union Minister for petroleum and natural gas), played on the safe side and didn’t want to reveal government actions, beforehand.

The Indian government instructed RIL that some sectors should be given priority over others. In all honesty, Mukesh didn’t have much of an argument here; he could only comply with the regulations enforced by the officials.

On 4 June 2011, Mukesh as the leading shareholder of RIL decided to address the problem which reflected the pricing gap. He got in touch with Manmohan Singh (India’s Prime Minister at the time), but no one knows the main topic of the discussion.

To calm the unrest among the stakeholders, Reliance Industry Limited embarked on a 50:50 business venture with British Petroleum. The main goal of this effort was to source gas in India and become an essential factor in the oil and gas global industry.

Crony Capitalism, at its finest

Crony capitalism is merely another word for corporate corruption, where venal politicians use their position to help private companies to take over the market. They achieve this by cutting their taxes and providing other benefits.

The same situation cropped up when the Indian petroleum and gas industry demanded more authority and less interference.

In 2013, the finance minister Palaniappan Chidambaram, Montek Singh Ahluwalia (deputy chairman of the Planning Commission) and, petroleum minister Veerappa Moily, came to a conclusion that increasing the price would be the best option.

During that business session of the CCEA, the officials gave the green light for increasing the price to $8.4 per mBtu.

Who suffered the most? Yeah, you guessed it – the ordinary people. Why aren’t we surprised?!

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“Gas Wars Quotes”

Our Critical Review

We hate to say it, but it was insanely difficult to cover every critical information in this summary.

Therefore, we urge you to buy the book and leave no stone unturned during the process.

Emir Zecovic

Emir is the Head of Marketing at 12min. In his spare time, he loves to meditate and play soccer.