Unravelling the Mukesh-Anil Ambani tangle over KG Basin gas, and trying to figure who is right, and who is doing a dodge, is hard business. But let us try. Since this writer has absolutely no personal stake in the matter, there remains a slim possibility of objectively analyzing the dispute between the two brothers over what indubitably is a national asset.

When the two brothers divided up the Dhirubhai Ambani kingdom in 2005, Mukesh's RIL agreed to sell twenty-eight million units of KG Basin gas to Anil's RNRL for his Dadri power project. The contract price was $2.34 per unit at which twelve million units of KG Basin gas were previously assigned to NTPC. The Manmohan Singh government, which has now become a party to the dispute between the two brothers in the Supreme Court, where the case is being heard, says more than four years later that that private agreement between the two brothers violates RIL's production sharing contract with the Centre on KG Basin gas, and cannot be accepted.

In its judgment in June this year, the Bombay High Court upheld the internal Reliance agreement, and asked RIL to fulfil it. RIL said it could not without government permission, since an eGoM had raised the KG Basin gas price to $4.21 per unit. It goes without saying that Mukesh does not want to sell RNRL the contracted gas at the contracted 2005 price for the contracted period of seventeen years, and the government's action, of intervening in the Supreme Court dispute between the two brothers to block that private agreement, ostensibly citing public and national interest, clearly and unambiguously comes to the aid of Mukesh against Anil.

So is Anil Ambani right in his highly visible, no-holds-barred campaign against his elder brother, in which he has also accused the Union petroleum minister, Murli Deora, of favouring Mukesh? The issue on one level is complicated (which is what makes it such an interesting study), but not so complicated either if you split it into sub-issues. One issue, and a significant one, on which considerable corporate ownership and management principles and precedents will be set, is the internal Ambani agreement for the KG Basin gas. Clearly, the government cannot now say that the agreement is null and void, citing the production sharing contract, and the higher eGoM-fixed gas price. That internal agreement was not a standalone agreement, but part of the demerger agreement of the entire Reliance group, and the present course of government action hurts one party, Anil, while benefiting the other, Mukesh. This is not just. While it is not the government's business to ensure justice for Anil, certainly it is an area the Supreme Court cannot -- and presumably won't -- overlook. Mukesh should be asked to honour his commitment to Anil (and to NTPC), and make up from his own pocket the price differential, plus pay the higher royalties to the government on the higher eGoM-fixed gas price. Contracts cannot be breached. That will be a warning to powerful industrialists not to try to bend the government to their will.

The second issue for investigation should be Mukesh's capital investment on KG Basin. Anil Ambani has alleged "gold-plating" or inflated figures, which the director-general, DGH, V.K.Sibal, has rejected. Sibal's defence, that the KG Basin capital expenditures have been subjected to independent and reliable audits, including by the CAG, are not borne out by facts. KG Basin gas consumers and taxpayers will have to bear the burden of this gold-plating, if it has happened, and so RIL's investments in the project have to be rigorously and satisfactorily audited. The government's position gives no satisfaction on the matter. The third issue is of pricing KG Basin gas. Allegations are swirling against the eGoM that fixed the gas price at $4.21 per unit. While there are several arguments against a fixed gas price (keeping it linked to variable world oil prices is recommended by some), there are also objections, mainly from Left parties, of pegging it to international prices, which gives windfall profits to producers, and hits consumers. Obviously, this is not an issue the Supreme Court can decide, except to ensure transparency in price fixing, and the government, in its duty to ensure this transparency, should take into account the views expressed by a cross-section of political parties in Parliament. Neither should gas price be so low that there is an incentive to divert it for profit, nor so high that producers strike a gold vein. In any case, the best international practices must be followed.

If everything fails to resolve the KG Basin dispute, the asset should be nationalized. Murli Deora is talking rubbish that this isn't the age of nationalization. What's happening in America post the September 2008 bankruptcies? And his own party president, Sonia Gandhi, prime minister Manmohan Singh and finance minister Pranab Mukherjee are on record praising the Indian bank nationalizations of the late-Sixties/ early-Seventies, and hold that the nationalized banks considerably insulated India from the 2008-2009 economic meltdown (which is true). Nationalization will also correct KG Basin gas-distribution distortions, because the host state, Andhra Pradesh, will get little of the gas, or indeed the other southern states.

In the final analysis, almost every player in the KG Basin dispute has come out not smelling of roses (Anil Ambani's association with Amar Singh on the matter is noxious, to say the least), and the government, already floundering on all fronts, has clearly no credibility left in the war between the two Ambani brothers. In the end, the "clean" image of prime minister Manmohan Singh is at stake. He could begin course correction by changing some of his more controversial ministers aligned with the dispute, commencing with Murli Deora.