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Home > Business > Special

Meet the petroleum minister

Rakteem Katakey in New Delhi | September 21, 2007

As a parliamentarian in the Lok Sabha many years ago, Murli Deora was a strong supporter of freeing household fuel LPG from subsidies.

"I was strongly against subsidising LPG, which even the affluent use. I used to make many speeches on the issue in Parliament. That was then. Now, as the petroleum minister, I realise how difficult it is to free pricing of petroleum products," Deora said recently.

This is just the kind of pragmatism that has helped Deora tide over one of his sternest tests in the much-politicised petroleum ministry - the issue of pricing of gas from Reliance Industries' [Get Quote] (RIL) Krishna-Godavari block, something that grabbed headlines for over three months. The please-all solution has proved to be a feather in Deora's cap.

"Deora's ability to be a good listener, and his understanding of business, as he is an industrialist himself, helped the empowered group of ministers reach a decision that more or less has satisfied all parties," a senior official in the petroleum ministry says.

Seventy-year old Deora, who has been at the helm of the petroleum ministry for the last year-and-a-half, first looked into gas pricing when his ministry had to clear RIL's K-G basin gas price agreement with Anil Ambani group company Reliance Natural Resources Ltd [Get Quote] (RNRL).

Before the control of RNRL was shifted to the Anil Ambani group from RIL, a gas supply agreement was signed. That was in January 2006. The two companies split in February that year, the same month Deora replaced Mani Shankar Aiyar in the petroleum minister's office.

In June that year, Deora took his first major decision in the gas pricing issue. He rejected the price of $2.34 per unit between the two companies, saying it did not honour the obligation that pricing had to be done at arm's length and "cannot be a private agreement between two brothers".

This raised many eyebrows. Was Deora, long seen as close to the Ambani family, taking sides in the war between the two brothers? "His personal relation with Dhirubhai Ambani had been great. The two Ambani brothers too call him chacha. But he has not let these relations affect his decisions as petroleum minister," another source close to Deora says.

In fact, it was Deora who met prime minister Manmohan Singh in August and suggested that an empowered ministerial group be formed to decide on the pricing. That was after a committee of secretaries, headed by the cabinet secretary, and the prime minister's economic advisory council had applied its mind to the issue.

"A decision of an eGoM would not be questioned by anyone. Since the issue was of national importance, which would be binding on many future ventures, we had to get the pricing right," Deora had said on the decision to form an eGoM.

However, the fact that the eGoM has resolved the pricing issue in a record time of under four weeks, and that Deora is supposed to have played a major part in the decision, has also brought on criticism of the soft-spoken man, who was earlier one of the youngest mayors of Mumbai.

"Look at it this way. The public sector companies have been calling for a price hike of gas for years. Even after the cabinet cleared it over a year ago, the price increase has not taken place. However, as soon as a private sector company comes to the government with the gas pricing issue, all ministers go out of their way to set the house in order," a senior official with a government-owned oil company says.

Deora, however, is not too bothered by the criticism. "The issue was important and we have cleared it," he said after the eGoM's decision.

Deora is known in media circles as a man who does not hold grudges. "If you offend him, he will still smile at you and invite you into his cabin," an official in his ministry says. And that appears to give Deora an edge over others of his ilk.

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