The ongoing spat between the Ambani brothers over the pricing of natural gas will negatively impact domestic capital markets and the larger interests of industry and government, finance minister Pranab Mukherjee said on Wednesday.

Speaking at an Idea Exchange programme organised by The Express Group, Mukherjee said the controversy between Mukesh Ambani?s Reliance Industries Ltd (RIL) and the Anil Dhirubhai Ambani Group (ADAG) has also been unfortunate for the larger interests of the economy.

?It will have its adverse impact on the capital markets because they (the two groups) are too big. They are much bigger than they were in the seventies,? he said. As of August 26, the two groups combined accounted for more than 10% of the market capitalisation of the two major stock exchanges, the BSE and NSE.

In the first confirmation that the dispute had reached the highest levels of government, Mukherjee said that is why Prime Minister Manmohan Singh has felt that both of them should try to sort out their issues.

As a statesman-politician, the finance minister used the The Express Group platform to advise the two brothers?heading the two largest industrial groups in the country?to settle the dispute ?with the help of arbitrators or with whom both the sides will listen.? But he would not like to take on that role himself, he said.

?I am not the competent person. There should be somebody else,? Mukherjee said, adding in explanation: ?I knew Dhirubhai Ambani from the 1970s onwards. I saw the boys growing up. Because they are sons of Dhirubhai, it is very difficult for me to make a distinction between the two of them.?

Mukherjee heads a group of ministers tasked with handling the government response to the dispute. The group also includes Deora and law minister Veerappa Moily. The case will come up for hearing on September 1 in the Supreme Court. The case will also impact the interests of state-owned NTPC that had signed an agreement with RIL to buy the gas at a price lower than that set by the eGoM.

The Centre proposes to file an application in the court stating that its decisions on the pricing of the gas are without prejudice to NTPC?s case against RIL. Mukherjee said since NTPC is an organ of the government under the ministry of power, there cannot be two contradictory views in open court.

?We will have to reconcile (them). That was the only exercise I had to do,? Mukherjee said. ?I am frankly admitting that I am conservative. When the government view is projected in a public forum, it should be an integrated one,? the finance minister asserted.

Describing the problem as the trickiest he is handling now, the minister also said it was unfair of the Anil Ambani group to attribute motives to petroleum minister Murli Deora?s stand on the dispute. Deora has said since natural gas is a national resource, a decision on its pricing cannot be subject to an agreement by two private parties.

?This is very unfortunate. Motive should not be attributed to anybody,? the finance minister said. Defending Deora, Mukherjee added: ?As petroleum minister he has done his job?what he felt was best and would serve the interest of the country. (He) has done nothing to invite this criticism.?

The Anil Ambani group, which plans to set up a string of power stations based on natural gas as fuel, has accused RIL of reneging on an agreement between them to sell the gas at $2.34 per million British thermal unit. The gas is to be sourced from an offshore Krishna-Godavari basin field known as D-6 owned by RIL.

The Mukesh Ambani group has argued that since an empowered group of ministers in 2008 set a rate of $4.20 for the gas that the government would buy to supply state-owned power and fertiliser stations and other utilities, that price should prevail for other buyers, too.