By R. Sasankan

A recent newspaper headline screamed: “Petroleum ministry trying to scuttle Aramco-RIL deal”.

Sobriety in news reporting has gone out of fashion: a lot of it is fevered speculation, often tinged by outrageous comment from so-called analysts. Don’t blame the reporters; most have no access to credible sources of information and, therefore, have to rely on what once used to be classified as Bazaar Gossip. But speculative frippery has now cloaked itself with dignity in venerable newspapers simply because authentic sources of information have all but dried up. The government and its ministers will not entertain reporters; news gatherers have to scuff their shoes on sidewalks hoping to grab a sound bite or two from any officious-looking functionary no matter how low down the pecking order he or she might be. On a bad day, all they can do is call a dial-a-quote analyst to buttress any headline-grabbing point that their editors want them to chase, no matter how far-fetched or outrageous it might be.

So, the story beneath that screaming headline said: “While Prime Minister Narendra Modi and the entire leadership are "encouraging" business to invest in the country with "ease of doing business" reforms, the Petroleum Ministry appears to be using the media to scuttle the Saudi Aramco-Reliance Industries (RIL) deal”.

On the face of it, the report sounded incredible. However, I decided to dig a little deeper and discovered that the leadership in the petroleum ministry under Dharmendra Pradhan hasn’t done anything to undermine the policies of Prime Minister Narendra Modi. Analysts have made unfounded inferences from some of his statements and action and suggested that he may be working at cross-purposes with the regime’s agenda.

Stated baldly, Pradhan remains totally committed to the Prime Minister who elevated him to the cabinet rank. He is known to enjoy good relations with the leadership of Reliance Industries as well. But that personal equation will not persuade him to refrain from torpedoing RIL’s interests if either Mr Modi or home minister Amit Shah wants him to do so.

Aramco’s deal to pick up a 20 per cent stake in RIL’s oil-to-chemicals division for which a non-binding letter of intent was signed on August 12 has run into problems with the government seeking court’s intervention to restrain RIL from selling its assets. The controversy stems from the government’s determination to enforce its claim to profit petroleum from the sale of oil from the Panna-Mukta-Tapti fields in western offshore which were being operated by the BG-led consortium in which RIL and ONGC were partners. The dispute over the government’s claim has been before an arbitration tribunal. RIL says the Tribunal has not given the final award but the petroleum ministry has argued that the interim award is enough justification for it to go to the courts to enforce its claim.

Mr Modi had never acted in a manner to hurt RIL’s interests during his first term that began in 2014. In fact, his government’s decision to fix a higher price for domestically produced natural gas from deep water fields and other difficult operational areas went very much in favour of RIL. This is believed to be the highest price for domestically produced gas anywhere in the world.

The Modi government is deeply annoyed with RIL—and this was evident from the way it argued its case in the Delhi High Court while seeking to restrain the sale of the assets of BG (now Shell) and RIL. It argued that RIL already has a debt of Rs 2880 billion and the sale of assets would make it difficult for the country’s largest private conglomerate to pay the estimated Rs 320 billion on account of the arbitration award.

It was Modi who took the initiative in inviting Saudi Arabia to invest in India. For long, the Middle East majors have shied away from the Indian market. Even Aramco at one stage was keen to limit its investment to just a minority share in one of the existing refineries. The Saudi petroleum giant’s sudden decision to invest in a 60 million tonne mega refinery in the state of Maharashtra came as a huge surprise. But it was after all a prestigious project for the Modi government which has been to drum up foreign investments into the country. But the subsequent agitation against the preferred location for the refinery and the resultant delay was a big blow to the BJP government in the state.

The question that everyone asked was this: Did RIL play a role in whipping up the agitation against the refinery? No one has made such a severe allegation against RIL. It is possible that the BJP suspects that if Aramco-RIL deal goes through, the Saudi giant may decide not to go ahead with the mega refinery. RIL always enjoyed excellent relations with the Saudi palace. The government’s Income Tax department has gone on record stating that it “exchanged information regarding members of the Mukesh Ambani family over alleged undisclosed foreign income and assets in a quarterly meet this month in Ukraine with seven countries that India has agreements for sharing tax-related information on citizens.” This makes it possible for the income tax department to source information on the bank accounts held by Indian citizens in those countries.

A close examination of the sequence of developments creates an impression that the Modi government is gunning for RIL. But it may have its own reasons for doing so and which it is not obliged to disclose to anyone.

A corporate house is reported to have played a key role in the latest political developments in Maharashtra that led to the formation of the Shiv Sena-led government. But which corporate house was it? It is certainly not the Tatas or the Mahindras. No one has identified RIL either – and probably never will be. But in the corridors of power, whispers can cause a lot of damage. Moreover, Mr Modi and Mr Shah depend a lot on the dope that the government’s Intelligence Bureau provides.

Prime Minister Modi and home minister Amit Shah can be vindictive if they are convinced that someone has deliberately scuppered their party’s interests. Unlike other corporate houses, the Ambanis do not give in easily. Since the days of patriarch Dhirubhai Ambani, they haven’t shied away from fights. Mukesh’s RIL enjoys tremendous clout with almost all political parties and the country’s bureaucracy including the IT department. The Ambanis are known to be generous with their hand-outs.

A compromise cannot be ruled out. Politicians and businessmen hailing from Gujarat are not averse to striking mutually beneficial deals. Even the Congress party did that. During the UPA days, petroleum minister Murli Deora, a politician believed to be a prominent supporter of RIL, suddenly opted for a transfer from the ministry of petroleum and natural gas and was succeeded by Jaipal Reddy. The mandate Reddy got was to weed out pro-RIL elements in the ministry and act against the Ambani-owned conglomerate. Even as Reddy started to act, RIL managed to stage a coup by replacing Reddy with Veerappa Moily. Will history repeat itself?

Modi cannot antagonise Aramco. Probably, Aramco will have to take the leadership into confidence and underscore that its business ties with RIL will not stand in the way of already committed investments in other projects. The situation calls for joint efforts by Aramco and RIL. Political observers reckon that the BJP leadership may not settle for anything less than the Shiv Sena’s return to its fold in Maharashtra. RIL is capable of facilitating such a development. But the political situation in the country is changing so swiftly that RIL may not be in a hurry to negotiate an immediate patch-up between the warring political parties.