Amar Singh, Manmohan Singh

New Delhi, July 5: Amar Singh has handed the Prime Minister two letters raising three economic demands, one of which is cancellation of the export-oriented unit (EOU) status of petroleum refineries in the country.

Reliance Industries, owned by Mukesh Ambani whose group is now locked in a telecom share dispute with younger brother and Amar’s friend Anil Ambani, enjoys EOU status that entitles the company to duty-free import of crude.

The two other demands made by Amar, whose Samajwadi Party has promised to back the nuclear deal and bail out the UPA government if the Left withdraws support, are charging private telecom operators more for the band of radio waves granted by the government and bringing the exchange rate to Rs 39 a dollar (the rate was Rs 43.16 to a dollar on Friday).

The three measures, Amar feels, will insulate the inflation-hit middle class against more hardships, and the Samajwadis against the wrong-doings of the Congress.

It is not clear whether the Samajwadi Party expects the government to enforce these demands. Amar himself appeared to be leaving some leeway, clarifying that raising the demands did not imply indulging in blackmail, exerting pressure or imposing conditions.. “If the government and the Prime Minister want to correct these mistakes, so much the better for them. But if they don’t, we should not be blamed for carrying on our struggle against these inside and outside Parliament,” he said.

The Samajwadi general secretary gave the letters, dated July 2 and 4, to Manmohan Singh yesterday when the two met.

Speaking to a group of journalists on Saturday, Amar said: “The Samajwadis have gone to jail to fight for economic causes. So, our pattern of support, whether unconditional or issue-based, will be decided if these economic grievances are addressed. If I am ready to correct my mistake (of initially opposing the nuclear deal), why not the government do likewise? To err is human, to correct the error is divine.”

In the letters to the Prime Minister, Amar has renewed his demand for a windfall profit tax of up to 50 per cent on oil companies, which will “generate instantly over Rs 100,000 crores”.

Amar said in one of the letters: “Even the International Energy Agency… has just come out with a scathing indictment on the government’s rash decision to allow conversion of a domestic refinery into an EOU and it even went to suggest that the government has created a monster by this act.”

The Samajwadi leader made no mention of Reliance Industries but the company had applied in March 2007 for the EOU status for its Jamnagar unit and got it soon after. According to EOU rules, the Mukesh Ambani company has to export 75 per cent of its output, while 25 per cent can be sold within the country. However, domestic sales are not viable as Reliance Industries does not get any government concession like state-run oil refineries do, and it will be difficult to match the subsidised prices within the country.

On spectrum — the bands of radio waves mobile phones use — Amar requested the Prime Minister to levy a one-time fixed charge of Rs 375 crore per Mhz to increase the government’s revenue. “I was given to understand that the telecommunications department is trying to take a very lenient view on levying the one-time fixed charge and increasing the spectrum usage charges at the behest of some of the incumbent GSM cellular operators like Airtel and Vodafone at the cost of the exchequer.”

Anil Ambani’s Reliance Communications, which now mostly uses CDMA technology, has plans to enter the GSM field.

The Samajwadi leader has also asked the Prime Minister to use foreign exchange reserves to prop up the rupee and “control inflation effectively”.