Headaches multiply for Mukesh

Things seem to be going awfully wrong for India’s richest man and, who is de facto “India’s Emperor of Crude Oil”, 54 years old, Mukesh Ambani, in recent weeks. Mukesh, even more than any one, must have been surprised to read newspaper report  that Maharashtra Chief Minister, Prithvi Raj Chauhan’s had recommended a CBI probe into  the manner in which what was stated to be “Wakf” was given 4,532 sq m plot in south Mumbai to acquisition for building a 27-storey skyscraper to Mukesh. Sources in Mumbai say Antilia had obtained a “no-objection certificate” for the deal from the Waqf Board in 2004 after paying it fees of Rs 16 lakh without prejudice to the Waqf Board's claim on the land. Values as most expensive house in the world at about Rupees 5,000 crore ($1bn), CBI has now been asked to go into the files of the deal. ”Antilla” is the most expensive house ever made in the world and is estimated at 1- 2 billion US$

Last week brought, came another fresh set of headaches for Mukesh. In a leaked Draft Report (2010-2011), the Comptroller and Auditor General of India's (CAG) in its first ever audit of oil and gas companies operating in India, said that the Government of India unduly favoured private oil and natural gas explorers including the Mukesh Ambani-led Reliance Industries Ltd incurring a huge loss to the exchequer. The CAG report mentioned that its regulatory arm - the Directorate General of Hydrocarbons allegedly favoured at least three private oil and natural gas explorers.

The report alleges that the government allowed Ambani's Reliance Industries Ltd to violate terms of its contract with the government for exploration in the Krishna-Godavari basin. The CAG report also stated that the Directorate General of Hydrocarbons had allowed RIL to violate norms. The violation of terms, in turn, helped Reliance Industries Ltd increase its capital expenditure plan to start production from the Krishna-Godavari basin. Allegedly, 70% of the draft Comptroller and Auditor General of India report is devoted to Reliance Industries Ltd alone.

The CAG sent its Draft Report to the Ministry of Petroleum and Natural Gas on June 8, 2011. The CAG report also noted that former Directorate General of Hydrocarbons (DGH) permitted Reliance Industries Ltd  to inflate its development costs on extracting the gas in the D6 block to the KG basin (KG-D6) from USD $2.47 billion to a huge USD $ 8.84 billion. The CAG also cited a joint venture of RIL with British Gas and Oil and Natural Gas Corporation for hiking development costs in the Panna-Mukta and Tapti gas fields. It has been earlier been alleged that an Empowered Group of Ministers had allowed Reliance Industries Ltd to sell per unit of the gas at a price of INR Rs. 4.20 even as the government companies were selling the same for just INR Rs. 1.20.

Yet another big bolt to the prestige of Mukesh Ambani’s RIL empire came from a surprise corner, Tata empire. This week, RIL shares headed south with the news that Tatas, usually,  not known  for being on the stock-based rich lists, but changing market dynamics have led to the salt-to-software conglomerate overtaking the combined market wealth of the two Ambani groups put together.

The share prices have been tumbling in recent past for both the Reliance groups, led by the billionaire brothers Mukesh and Anil Ambani, the analysts put the blame on a string of controversies surrounding them for many months now. On the other hand, a host of Tata Group firms have grown stronger, in terms of stock market valuation, while shrugging off overall bearish sentiments in the broader market and even some controversies related to them. In the process, the stock market wealth of the entire Tata Group has grown this  week to close to Rs 4,40,000 crore – highest for any corporate house and bigger than the combined figure of the two Ambani groups together at about Rs 3,67,000 crore.

Headaches are not going to end soon for RIL in this decade itself.. Red Herring, the prestigious technological journal warned this week, “If current trends hold, in 2012, China will make and buy more cars than America or the whole of Europe. China is not only adding cars, it has also become the world’s second-largest oil consumer.” Over the past three years, we’ve seen the destructive impact of oil. Its price soared to almost $150 a barrel in the run-up to the worst financial crisis since the Great Depression, and it caused the worst environmental disaster in American history as perhaps 4.1m barrels of oil flooded unimpeded into the waters of the Gulf of Mexico. For crude oil King, nothing could be more catastrophic.

China and Israel have learnt that the electrification of transport is a critical step to a more sustainable future, breaking the inexorable connection between economic growth and oil dependence. That means powering our cars without oil. Only 2% of China’s population today own cars—80% of them first-time car buyers—but the market has been growing by almost 50% a year. By 2020 China will rely on costly foreign oil imports for 65% of its needs. For RIL it means gradual erosion of empire for oil

For China this represents a triple play. First, it wants to avoid the vulnerabilities of an economy built on imported oil. Second, it desperately needs to clean its urban centers of pollutants largely produced by exhaust pipes. And, third, it sees the opportunity to take a page out of America’s 20th-century playbook, making a large domestic automobile industry the cornerstone of global economic leadership. This new type of car, powered not by internal-combustion engines but by batteries, power electronics and electric motors, plays to the strengths China has gained in consumer electronics over the past decades.

Chinese government has set a goal to become the number one producer of electric cars by 2012. In August 2010 the country announced that it had commissioned 16 state-owned enterprises to begin building the electric-vehicle industry. These enterprises, led by State Grid (the world’s largest utility, which controls 88% of China’s electrical grid), also include the leading companies across the automotive, energy, finance, retail and infrastructure industries that are committed to building this framework. HSBC Research predicts that China’s share of the global electric-vehicle market will grow from 2.7% in 2010 to 35% by 2020.

Israel will also implement the world’s first nationwide battery-switching and vehicle-charging network this year. The infrastructure allows drivers to switch depleted batteries for full ones in less time than refueling with gasoline. As a result, electric cars no longer require drivers to buy expensive batteries or to worry about limited driving distance.

Electric cars no longer require drivers to buy expensive batteries or to worry about limited driving distance After nearly three years of development, testing and trials in partnership with Renault, history is being made as people are able to drive electric cars throughout the entire country with guaranteed mobility, zero oil use and zero exhaust emissions. The total cost of implementing such a nationwide network in Israel is equal to less than seven days of fuel use by current petrol-engine cars in the country. That amazingly small number holds true in most countries around the world—China included.

Electric cars are a way to disconnect economic growth from ever-deepening oil dependence. Moving the transport sector to reliance on electrons—with an open menu of electricity sources and a massive distributed storage of car batteries to improve the grid and allow higher reliance on renewable sources—can build industries, create jobs and improve economic, environmental and national security all at once. India, which imports about 75 per cent of its crude requirements, had its oil-import bill climb six-fold in the past decade to $85.5 billion for the year ended March as demand and prices rose, equivalent to about 7 per cent of gross domestic product