For nearly five years, the price of natural gas in India was the subject of a bitter dispute between two of the country's richest men, Mukesh Ambani, whose net worth is estimated at US$29 billion (Dh106.51bn), and his younger brother Anil, whose wealth totals $13.7bn.
Mukesh's Reliance Industries (RI) was to supply gas to Anil's Reliance Natural Resources (RNR) to provide fuel to Reliance Power, which plans to build a major power plant to serve Delhi and its environs. They had agreed on a price set in 2000, which would remain fixed for 17 years. Within six years, the brothers split and the group divided assets. Supported by the Indian state, RI wanted a higher price. RNR protested: the high court sided with RNR. The Indian supreme court gave its verdict this month: neither side controlled the gas, and the price had to be renegotiated, bearing in mind the standard set by the government.
This complex dispute has far-reaching consequences on the sanctity India attaches to contracts, the role the government might play in a dispute, and how India prices its assets. Mukesh Ambani heads the $44bn RI; Anil's businesses are smaller (only in comparison with RI) and more diversified. Sons of the late Dhirubhai Ambani, they were once united but separated their interests within years of their father's death, ostensibly pursuing different business models.
Breaking up an integrated business is never easy: one part of the business is dependent on another, and for each part to function smoothly, all movements have to be synchronised. It was the genius of the father, and later the sons, to develop a strategy where the business absorbed surplus costs and slack at each stage of the manufacturing cycle, from refining to petrochemicals to polyester yarn, all the way to textiles, integrating processes to drive down costs and increase margins.
Under the agreement, Mukesh's RI was to sell gas from the Krishna Godavari basin off India's south-eastern coast to the power project that Anil's RNR is to set up. The long-term price on which the companies agreed was set at a time when world gas prices were low. If the price is renegotiated, RNR might have to pay 80 per cent more. Its stock lost a 10th of its value after the court ruling.
The windfall from a higher gas price will not necessarily go to the government. According to industry practice, RI may get more benefits in the early years of exploration, to account for the risks the company takes on, although in later years the state's share rises.
The government will require utilities to supply fertiliser companies as a priority, but then the fertiliser will be sold at a subsidised price to farmers, who are politically powerful. So whatever gains might be made through a higher price might be lost in the complex arithmetic of Indian subsidies. Gas and electricity utilities and consumers may have to pay more.
The dispute came to a head because four years after the death of their father in 2002, the brothers decided to split the assets of the Reliance Group. Dhirubhai knew how to exploit opportunities offered by India's formerly restrictive regime: he secured the licences he wanted, placed impediments in the path of rivals, and invested in building world-scale plants.
He was a visionary who wanted to build corporate assets that were significantly bigger than those of his rivals in the private or public sector. He saw the world, and not just Indian companies, as his competition.
The guiding principle of Reliance was to squeeze costs from the supply chain: integrate processes; absorb slack; control access to raw materials; and squeeze the maximum yield from each component in the value chain.
That system was built on the assumption that various arms of the Reliance Group worked together, as parts of the whole. But when the brothers split, things changed. The price of gas in 2000 was $2.34 per million British thermal unit (BTU).
The price agreed on in 2000 was not entirely arbitrary. It was based on a bid floated by the state-owned National Thermal Power Corporation. The recent dispute arose because RI wanted a higher price - $4.20 per million BTU - reflecting the changed market conditions.
The government reminded the companies that neither owned the gasfield. The supreme court went further.
The majority opinion not only cited the chief architect of the Indian constitution, the late BR Ambedkar, but also took shots at the global economy. "The neoliberal agenda has increasingly eviscerated the state of stature and power, bringing vast benefits to the few, modest benefits to some, while leaving everybody else, the majority, behind," the judgment said. "Historically ? predatory forms of capitalism seem to organise themselves, first and foremost, around the extractive industries that seek to exploit the vast, but exhaustible natural resources."
This charming song sheet did not get unanimous approval: Justice P Sathasivam declined to join this simplistic critique of modern economy.
Family disputes are common in India. And while the size of the Ambani brothers' businesses makes this dispute important, there are wider issues that deserve greater scrutiny. Consider the sanctity of contracts. Granted, some government officials insisted that the original agreement between the two companies, to trade gas at $2.34 per million BTU, was not an arm's-length transaction, that the price was not plucked out of thin air.
Granted, too, that fixing a price for 17 years is unusual, but Indian law permits forward contracts, and another company could have hedged to secure such a price, by accounting for such a risk by dealing in derivatives to control costs.
Related is the question of how India prices its assets. Industry observers say that the process of setting prices is not consistent or reliable. When the state changes prices and does not explain its actions adequately, it creates uncertainty in the market.
And uncertainty does not help build India's reputation in international markets. Oil industry experts say the reason that oil majors have not flocked to India is not just that the country's reserves are unproved, but also that they have concerns over policy stability and certainty. In 2006, no foreign company offered a bid for Indian exploration blocks on offer, and foreign interest was low the year after.
Clearer pricing would attract more bidders.
The supreme court's verdict has settled the dispute for now. But it has not done much to remove the uncertainty. Investors now know that they can enter into contracts in India. But the terms can change. And the government has the last word. That is not exactly soothing for the markets.
business@thenational.ae
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
Killing of Qassem Suleimani
The candidates
Dr Ayham Ammora, scientist and business executive
Ali Azeem, business leader
Tony Booth, professor of education
Lord Browne, former BP chief executive
Dr Mohamed El-Erian, economist
Professor Wyn Evans, astrophysicist
Dr Mark Mann, scientist
Gina MIller, anti-Brexit campaigner
Lord Smith, former Cabinet minister
Sandi Toksvig, broadcaster
THE SIXTH SENSE
Starring: Bruce Willis, Toni Collette, Hayley Joel Osment
Director: M. Night Shyamalan
Rating: 5/5
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
UAE currency: the story behind the money in your pockets
What is 'Soft Power'?
Soft power was first mentioned in 1990 by former US Defence Secretary Joseph Nye.
He believed that there were alternative ways of cultivating support from other countries, instead of achieving goals using military strength.
Soft power is, at its root, the ability to convince other states to do what you want without force.
This is traditionally achieved by proving that you share morals and values.
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Global state-owned investor ranking by size
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China
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UAE
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Japan
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Norway
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Canada
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BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
RESULTS
Catchweight 63.5kg: Shakriyor Juraev (UZB) beat Bahez Khoshnaw (IRQ). Round 3 TKO (body kick)
Lightweight: Nart Abida (JOR) beat Moussa Salih (MAR). Round 1 by rear naked choke
Catchweight 79kg: Laid Zerhouni (ALG) beat Ahmed Saeb (IRQ). Round 1 TKO (punches)
Catchweight 58kg: Omar Al Hussaini (UAE) beat Mohamed Sahabdeen (SLA) Round 1 rear naked choke
Flyweight: Lina Fayyad (JOR) beat Sophia Haddouche (ALG) Round 2 TKO (ground and pound)
Catchweight 80kg: Badreddine Diani (MAR) beat Sofiane Aïssaoui (ALG) Round 2 TKO
Flyweight: Sabriye Sengul (TUR) beat Mona Ftouhi (TUN). Unanimous decision
Middleweight: Kher Khalifa Eshoushan (LIB) beat Essa Basem (JOR). Round 1 rear naked choke
Heavyweight: Mohamed Jumaa (SUD) beat Hassen Rahat (MAR). Round 1 TKO (ground and pound)
Lightweight: Abdullah Mohammad Ali Musalim (UAE beat Omar Emad (EGY). Round 1 triangle choke
Catchweight 62kg: Ali Taleb (IRQ) beat Mohamed El Mesbahi (MAR). Round 2 KO
Catchweight 88kg: Mohamad Osseili (LEB) beat Samir Zaidi (COM). Unanimous decision
Tu%20Jhoothi%20Main%20Makkaar%20
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ELuv%20Ranjan%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3ERanbir%20Kapoor%2C%20Shraddha%20Kapoor%2C%20Anubhav%20Singh%20Bassi%20and%20Dimple%20Kapadia%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203%2F5%3C%2Fp%3E%0A
Wenger's Arsenal reign in numbers
1,228 - games at the helm, ahead of Sunday's Premier League fixture against West Ham United.
704 - wins to date as Arsenal manager.
3 - Premier League title wins, the last during an unbeaten Invincibles campaign of 2003/04.
1,549 - goals scored in Premier League matches by Wenger's teams.
10 - major trophies won.
473 - Premier League victories.
7 - FA Cup triumphs, with three of those having come the last four seasons.
151 - Premier League losses.
21 - full seasons in charge.
49 - games unbeaten in the Premier League from May 2003 to October 2004.
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
How it works
1) The liquid nanoclay is a mixture of water and clay that aims to convert desert land to fertile ground
2) Instead of water draining straight through the sand, it apparently helps the soil retain water
3) One application is said to last five years
4) The cost of treatment per hectare (2.4 acres) of desert varies from $7,000 to $10,000 per hectare
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Dates for the diary
To mark Bodytree’s 10th anniversary, the coming season will be filled with celebratory activities:
- September 21 Anyone interested in becoming a certified yoga instructor can sign up for a 250-hour course in Yoga Teacher Training with Jacquelene Sadek. It begins on September 21 and will take place over the course of six weekends.
- October 18 to 21 International yoga instructor, Yogi Nora, will be visiting Bodytree and offering classes.
- October 26 to November 4 International pilates instructor Courtney Miller will be on hand at the studio, offering classes.
- November 9 Bodytree is hosting a party to celebrate turning 10, and everyone is invited. Expect a day full of free classes on the grounds of the studio.
- December 11 Yogeswari, an advanced certified Jivamukti teacher, will be visiting the studio.
- February 2, 2018 Bodytree will host its 4th annual yoga market.
THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
The Transfiguration
Director: Michael O’Shea
Starring: Eric Ruffin, Chloe Levine
Three stars
UAE currency: the story behind the money in your pockets
Marathon results
Men:
1. Titus Ekiru(KEN) 2:06:13
2. Alphonce Simbu(TAN) 2:07:50
3. Reuben Kipyego(KEN) 2:08:25
4. Abel Kirui(KEN) 2:08:46
5. Felix Kemutai(KEN) 2:10:48
Women:
1. Judith Korir(KEN) 2:22:30
2. Eunice Chumba(BHR) 2:26:01
3. Immaculate Chemutai(UGA) 2:28:30
4. Abebech Bekele(ETH) 2:29:43
5. Aleksandra Morozova(RUS) 2:33:01
Russia's Muslim Heartlands
Dominic Rubin, Oxford
The biog
Favourite film: Motorcycle Dairies, Monsieur Hulot’s Holiday, Kagemusha
Favourite book: One Hundred Years of Solitude
Holiday destination: Sri Lanka
First car: VW Golf
Proudest achievement: Building Robotics Labs at Khalifa University and King’s College London, Daughters
Driverless cars or drones: Driverless Cars
Diriyah%20project%20at%20a%20glance
%3Cp%3E-%20Diriyah%E2%80%99s%201.9km%20King%20Salman%20Boulevard%2C%20a%20Parisian%20Champs-Elysees-inspired%20avenue%2C%20is%20scheduled%20for%20completion%20in%202028%0D%3Cbr%3E-%20The%20Royal%20Diriyah%20Opera%20House%20is%20expected%20to%20be%20completed%20in%20four%20years%0D%3Cbr%3E-%20Diriyah%E2%80%99s%20first%20of%2042%20hotels%2C%20the%20Bab%20Samhan%20hotel%2C%20will%20open%20in%20the%20first%20quarter%20of%202024%0D%3Cbr%3E-%20On%20completion%20in%202030%2C%20the%20Diriyah%20project%20is%20forecast%20to%20accommodate%20more%20than%20100%2C000%20people%0D%3Cbr%3E-%20The%20%2463.2%20billion%20Diriyah%20project%20will%20contribute%20%247.2%20billion%20to%20the%20kingdom%E2%80%99s%20GDP%0D%3Cbr%3E-%20It%20will%20create%20more%20than%20178%2C000%20jobs%20and%20aims%20to%20attract%20more%20than%2050%20million%20visits%20a%20year%0D%3Cbr%3E-%20About%202%2C000%20people%20work%20for%20the%20Diriyah%20Company%2C%20with%20more%20than%2086%20per%20cent%20being%20Saudi%20citizens%0D%3C%2Fp%3E%0A
%3Cp%3EThe%20Punishment%20of%20Luxury%3Cbr%3EOMD%3Cbr%3E100%25%20Records%3C%2Fp%3E%0A
WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
ATP WORLD No 1
2004 Roger Federer
2005 Roger Federer
2006 Roger Federer
2007 Roger Federer
2008 Rafael Nadal
2009 Roger Federer
2010 Rafael Nadal
2011 Novak Djokovic
2012 Novak Djokovic
2013 Rafael Nadal
2014 Novak Djokovic
2015 Novak Djokovic
2016 Andy Murray
2017 Rafael Nadal
2018 Novak Djokovic
2019 Rafael Nadal
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
