Somebody in the finance ministry must surely have a great sense of humour. Apparently, the much-touted Sovereign Wealth Fund - which is supposed to enable Indian companies to invest in energy assets abroad - will start with an initial corpus of Rs 1,000 crore.
That's peanuts. For contrast, let's remember that Rs 402 crore is the daily loss incurred by oil marketing companies in selling subsidised petro-products. We are destroying wealth equivalent to the initial corpus of the sovereign wealth fund every two-and-a-half days.
But Rs 1,000 crore is the sum mentioned by a Business Standard report on Thursday. Quoting an unnamed official, the report reassures us that more money can be raised later. "Besides the initial Rs 1,000 crore, the new entity could raise funds from the market or could use surplus cash lying with public sector units."
Sure, but for what purpose, when we are busy destroying the sovereign wealth assets we currently own? Just consider this macro number: during the tenure of UPA 1 and 2 (to date) the cumulative subsidy bill on oil alone has crossed Rs 4,00,000 crore - it will surely cor.
ONGC, as Firstpost noted earlier today, is already saying that in two years' time, it will have no surplus to report at current levels of subsidisation of the OMCs.
In any case, one wonders why a sovereign wealth fund is needed in such a tearing hurry when we don't have the kind of money China has.
The world is not refusing to sell us oil or coal. We can always buy them without owning the oil wells or coal mines abroad.
Owning an energy asset abroad does not mean you can get it for free or cheaply back home. The countries where these energy assets are located will impose taxes, and expect you to sell at market rates. If you have to buy your own energy assets at market prices, why try to own piece of the pie with a sovereign fund?
If the idea is that ONGC or Coal India will buy these assets and then sell them at subsidised rates in India, it only means we will be extending our energy pricing follies on a global scale.
If the idea is that energy assets will be owned by private companies, they are not going to do so at a loss. Why do you think Reliance is so unwilling to sell its Krishna-Godavari gas at the official price? Reliance owns shale gas assets abroad, and it is not going to help us any.
Buying energy assets abroad can be a part of corporate strategy to diversify risk; it may not do much to ensure cheap energy back home.
More than creating a sovereign wealth fund, we need policies that will stop destroying the country's existing sovereign wealth - whether it is coal or oil - by deliberate politically-driven underpricing of public sector energy assets.
Clearly, the sovereign wealth fund idea is a joke. Ha-ha.