* Minister accuses Reliance of creating shortage
* Latest attack in anti-corruption campaign
* Heated political atmosphere with general election due by
(Adds Reliance reaction)
By Nidhi Verma
NEW DELHI, Feb 11 (Reuters) - Delhi's new chief minister
took his anti-graft campaign to new heights on Tuesday, ordering
an investigation into India's richest man, Reliance Industries
Chairman Mukesh Ambani, and policymakers over gas
Arvind Kejriwal and his Aam Aadmi, or Common Man, Party
(AAP) won the Delhi state election in December with promises to
fight corruption and to tackle high utility prices.
The investigation being opened is the latest salvo against
the tycoon over natural gas produced from the Reliance-operated
D6 block on India's east coast.
Kejriwal said Ambani's company had created an artificial
shortage to "blackmail" the government to set higher prices.
"We believe that high prices are being caused by
corruption," Kejriwal told a news conference, speaking in Hindi.
In a statement, Reliance called the allegations "baseless"
and said it could take legal action in response.
Reliance has long maintained geological complexities have
pushed production lower. The country's upstream regulator
believes the company failed to drill the number of wells
approved in the development plan.
"The complaint and each of the allegations on the basis of
which the Delhi Government has taken such action are completely
baseless and devoid of any merit or substance whatsoever,"
Reliance shares fell 2 percent in a flat Mumbai market.
Kejriwal's attack plays into a heated political atmosphere,
with a general election due by May.
Leading a party formed just a year earlier, Kejriwal's
victory in Delhi stunned the ruling Congress Party and
opposition Bharatiya Janata Party (BJP).
The BJP is ahead in opinion polls as the public grows
disillusioned with Congress, which leads the ruling coalition,
over a series of corruption scandals and a slowing economy.
Although it is unlikely to win, AAP could draw votes away from
'WELLS BELONG TO US'
Reliance had agreed to supply gas to utility NTPC Ltd
at about $2.3 per million British thermal units
(mmBtu) for about 17 years. But the price of gas from D6 was
fixed at $4.2 per mmBtu in 2007 when Murli Deora was oil
minister, in the Congress-led government.
Last year, after Veerappa Moily took over as oil minister,
the federal government decided to move to market-linked pricing,
which could double local gas prices from April 1 this year.
"Today we have instructed the anti-corruption branch to file
a criminal case against Murli Deora, FIRs (investigations)
against Veerappa Moily, V.K. Sibal, the (then) director general
of hydrocarbons, Reliance Industries Ltd Chairman Mukesh Ambani
and others," Kejriwal told the news conference.
An FIR, or first information report, is the first stage of
an official investigation into a complaint. Kejriwal said he had
acted after receiving four complaints.
He said he would ask the federal government to suspend any
order to raise gas prices until the issue was resolved.
"The wells belong to us. If Reliance and Mukesh are not
producing gas in order to create an artificial scarcity, then
the government should look at giving these wells to the
(state-run exploration company) ONGC and some other entity which
can operate them and produce gas," he said.
Ambani is the richest man among India's ranks of
billionaires, with an empire that ranges from energy to mobile
phones and media. Last year, he was given security cover by the
government following threats against his life.
WATER FROM A WELL
The D6 block was expected to contribute up to 25 percent of
gas for Asia's third-largest economy but its lower-than-expected
output has left the energy-hungry nation more dependent on
expensive, imported liquefied natural gas (LNG) to fuel power
and fertiliser plants.
Oil Minister Moily, asked for his reaction, said he had
taken a special interest to ensure that gas prices were reduced.
"It is not the question of Mukesh or Deora or anybody," he
said, speaking on television. There was a system for fixing
prices and nothing was done without expert advice, he said.
($1 = 62.3600 Indian rupees)
(Additional reporting by Sruthi Gottipati; writing by Angus
MacSwan; editing by Simon Cameron-Moore and Jason Neely)