Delhi Chief Calls Police on Billionaire Ambani Over Gas Prices

Delhi Chief Minister Arvind Kejriwal will file a police complaint against Reliance Industries Ltd., its billionaire Chairman Mukesh Ambani and oil minister Veerappa Moily for creating an artificial shortage of gas in the country and raising prices.

“I’ve received complaints that Reliance, its CEO Mukesh Ambani and some ministers have manipulated gas prices,” Kejriwal told reporters today in New Delhi. “I’ve asked the anti-corruption branch to file the FIR,” he said, referring to a First Information Report, which compels police to investigate.

Kejriwal, the anti-graft activist who rose to power in December by locking horns with water and power companies in Delhi over inflated bills, is expanding his crusade nationwide with an eye on general elections due by May. Overnight street protests like the one he ran last month demanding control of the city’s police risk alienating voters looking for an alternative to the Congress party, which has seen its popularity tumble amid the slowest economic growth in a decade.

“He’s lost support within his own party and with the general public because he’s behaving like a very confused man, interpreting laws on different days in different ways,” said B.G. Verghese, a political analyst with the New Delhi-based Centre for Policy Research. “It’s anarchy, plain and simple.”

Prime Minister Manmohan Singh’s cabinet has allowed gas producers including Ambani’s Reliance (RIL) and state-run Oil & Natural Gas Corp. to raise prices starting in April. The new formula for calculating gas prices will almost double rates and yield 540 billion rupees ($8.7 billion) of profits for Reliance every year, Kejriwal said today.

Reliance Drops

“There’s a system for setting prices and he should know how the system works,” Moily told reporters outside parliament today, rejecting Kejriwal’s allegations. “Just like we take a bucket to take out water from a well, we can’t take out oil like that.”

Tushar Pania, a Mumbai-based spokesman at Reliance, declined to comment on the allegations. Ambani is India’s richest man with a net worth of $19 billion, according to the Bloomberg Billionaires Index.

Reliance fell 2 percent to 805.25 rupees at the close in Mumbai, the most in two weeks. The key S&P BSE Sensex rose 0.1 percent.

Kejriwal and his Aam Aadmi party will lose control of the Delhi government should supporters follow the lead of independent Delhi lawmaker Rambeer Shokeen, who withdrew his backing yesterday on grounds that the one-year-old party has failed to keep campaign promises. Kejriwal, a former Indian income tax official, has vowed to resign as chief minister if the Delhi legislative assembly does not approve his anti-corruption bill scheduled for a vote on Feb. 16.

Output Slump

Gas production from Reliance’s KG-D6 block has slumped to about 10 million cubic meters a day from more than 60 million in 2010. The company says output dropped because the reservoir is more difficult to access than estimated.

The Directorate General of Hydrocarbons, the oil ministry’s exploration unit, says Reliance hasn’t drilled as many wells as it had promised. The government wants Reliance to give a bank guarantee for charging higher rates for gas, which will be exercised if it is proved the company deliberately reduced production from the block in the Bay of Bengal.

“The government should take away the wells from Reliance and give it to ONGC and other state companies who can produce gas from there,” Kejriwal said.

ONGC, which found reserves adjacent to Reliance’s fields, has said deepwater drilling is not viable at current prices.

To contact the reporters on this story: Kartikay Mehrotra in New Delhi at kmehrotra2@bloomberg.net; Debjit Chakraborty in New Delhi at dchakrabor10@bloomberg.net

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net; Pratish Narayanan at pnarayanan9@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.