Natural resources not private property

The Supreme Court judgement in the Ambani case is emphatic that natural resources belong to the people of this country, not to private entities or to the government . The government's control over them is in a fiduciary capacity, and the Constitution obliges it to use that control to advance popular welfare. It is on this basis that the Court has dismissed the Anil Ambani group's claim to a sizeable chunk of gas from the KG Basin at a price that is significantly lower than the price fixed by the government for sale to other consumers.

This ruling has implications not just for the row between the Ambani brothers, but also for all policy with regard to extraction and sale of natural resources — not just petroleum and gas but also mineral ores, coal and water — and contracts derived from such policy. Whether the manner in which iron ore, bauxite or coal is mined subserves the public interest is a moot question . The ridiculously low rates of royalty collected by mineral rich states on the wealth taken out by some individuals who have gathered enormous political clout besides wealth, are now open to legal challenge.

In the petroleum sector, future exploration and development contracts would have to explicitly cede the absolute authority of the government to determine price and utilisation of the crude and gas extracted.
The judgement vindicates the stand of Reliance Industries Ltd on a number of issues. However, the court has asked it to reach an agreement with RNRL within 14 weeks for gas supply on terms that respect government policy on price and utilisation and benefit the shareholders of both companies. RIL would have to sell gas to RNRL but at a price that other consumers pay.

This is not any disaster for RNRL or Reliance Power — all it means is that their power projects would make money from efficient conversion of fuel into electricity, as other projects do, and not from windfall profits arising from a combination of ultra cheap fuel and a fixed tariff (if the tariff varied to let the fuel cost pass through, windfall profits disappear ). But the folly of having included gas, a public asset, in a family division of assets has left the Anil Ambani group with a lower share than anticipated. That is a private dispute, to which the present ruling brings no closure.