Who Mans Rig?

Najeeb Jung

R.S. Sharma
Is acting CMD and director, finance of ONGC. The PMO rejected him earlier as it did not see him as a go-getter.

Vikram Mehta
Ex-IAS officer and highly networked Shell India chief. Many feel a foreign firm CEO can bring in global practices.

Akhil Gupta
Blackstone India chairman now. Keen lobbying on to include the former Reliance man in the list.

he interminable, 11-month search for an Oil and Natural Gas Corporation (ONGC) head honcho is turning out to be as tough as the PSU's hunt for new sources of oil and gas. And the analogy doesn't end there—as the oil major enlarges its geographical base, even scouting abroad, the government is widening the "slate of candidates" to include private sector CEOs too. It seems it wants the best management talent for the top post in what is India's largest and most profitable corporate entity.

Ironically, both processes are intertwined; an excellent CMD can take the PSU to the next level, change its fortunes altogether. Unfortunately, age-old issues bog it down—like politics, corporate lobbying and wishlists from several quarters. Like a typical snake-and-ladder game, supporters and critics have emerged for most of the serious contenders in the CMD race (the same has been the case for strategies to increase the PSU's nearly-stagnant production!).

The jostling became obvious at the indecisive meeting of the 'search committee' on April 17. Sources say there was a discussion to consider people who hadn't applied, so the meeting obviously ended "on an inconclusive note". N.K. Sinha, Public Enterprises Selection Board (PESB) chairman who heads the committee, had this to say, "The candidates recommended by us haven't been rejected. All that is happening is that others are also being looked at." Adds petroleum secretary and committee member M.S. Srinivasan, "We'll meet towards April-end to decide who to call for the interviews."

There were murmurs that problems arose because of attempts to dislodge the top contenders in the PESB panel of 20-plus names. One of them was R.S. Sharma, ONGC acting chairman (as finance director his term has been extended till 2011) whose candidature was earlier rejected by the PMO in February '07—they felt he was not aggressive enough and decided to extend the search to the private sector. The PMO decision was surprising since at the time Mithilesh Prasad, CEO of Hindustan Petroleum subsidiary Prize Petroleum, was told he was not eligible as he was from the private sector. He's back as a contender now.

Another buzz is with the name of Najeeb H. Jung, senior researcher, Oxford Institute of Energy Studies, a name shortlisted by the PESB panel. His past experience as an ONGC board member, a joint secretary in the petroleum ministry and as energy consultant with the Asian Development Bank worked in his favour. Incidentally, he also had a two-year stint with the Observer Research Foundation, promoted by Mukesh Ambani's Reliance Industries. Jung almost admitted to being interested in the job while talking to Outlook: "My need for dollars is no more, and there is a need to get back to India (as my mother is old at 86). ONGC offers a huge opportunity."

There were also a few new names discussed at the April 17 meeting. One of them was that of Akhil Gupta, chairman, Blackstone India, a subsidiary of the US-based group which works in the financial services arena, including private equity. But during his earlier stint in India, Gupta was working for the Reliance group and was the only non-family member to stay at the Ambanis' Mumbai residence before the break-up between the two brothers. His name also cropped up in one of the several controversies during the sibling wars between elder brother Mukesh and Anil.

Shell India chief Vikram Mehta is said to be a second new name mentioned at the meeting of the six-member search panel. He's networked into the right circuits and with his 'foreign connections' may be able to inculcate new systems, processes and technology in ONGC to improve operations. One of ONGC's failures has been that despite holding the largest number of exploration blocks it's been unable to strike oil, unlike less experienced private players like Reliance Industries and Cairn Energy. Essar Oil vice-president H.N. Belawat, Surya Roshi president B.B. Pradhan, Singareni Collieries director J.V. Dattatreyulu, Borosil Glass Works director R.V. Pillai, Hubli Electric Supply director (finance) K. Muthupandian and Agasthya Biofarm India head D. Aravindakshan are the other frontrunners on the tentative shortlist.

o now one gets a sense of the picture that's emerging. There's a section that is interested in a PSU candidate, thinking an internal candidate is better as "it takes him/her less time to pick up the ropes as there is greater acceptability among colleagues". Moreover, it doesn't want to rock the boat as the rules state that first preference should be given to such candidates. Both Murli Deora, petroleum minister, and cabinet secretary B.K. Chaturvedi stress that an invitation to private managers doesn't ruin Sharma's chances. According to Chaturvedi, Sharma's re-selection is "not ruled out".

But there's also a growing realisation within the government that what ONGC needs is an injection of entrepreneurial blood. And that can possibly come from the private sector. Chaturvedi, whose notings in the earlier selection process probably led to a change in the PMO stance, insists that "I didn't want a larger selection but was keen that the requirements of the ONGC job should be met". In the same breath, he adds that what's being sought is domain knowledge, ability to manage, and "also something extra to help ONGC achieve better results in the core area of energy security".

Having held the petroleum secretary portfolio, Chaturvedi feels strongly about several issues. He thinks that the largest company by market capitalisation needs to emerge stronger given the growing global competitiveness. "We are not just looking at technical qualification but also seeking a go-getter," he says. Deora adds that he personally urged private sector people to apply, but found poor response. "I thought the private sector would be keen to take up the challenge...unfortunately it hasn't been so."

One disincentive may be the lower payscale in PSUs. While the cost-to-company salaries of a CMD in ONGC is likely to be around Rs 10 lakh, a similar job in the private sector will fetch anywhere between Rs 10 crore (Indian salary) or $10 million (foreign one). However, Deora says that "if somebody from the private sector comes, he will forget the payscales or be willing to sacrifice it because he would be rich enough. For such people, the challenge of being ONGC chairman will be very attractive." Jung, who draws a pension from ADB, is one such candidate.

Apart from the public-private debate, there's a third line of reasoning in government circles. This segment believes in the 'foreign' factor. It points out that in the recent past the best exploration results have been shown by foreigners or Indian firms with access to global best practices. Therefore, there was a serious move by the oil and gas regulator, Directorate General of Hydrocarbons, to woo several foreign firms to bid under the new exploration licensing policy. More global firms will also provide competition to ONGC, and help shake up the sleepy exploration giant.

Now it's inevitable that each section will try to impose its logic on the ONGC selection process, trying to nudge decision-making to favour certain kinds of candidates. Sharma has the support of the public lobby, Jung, Gupta and Mithilesh the private ones, and Mehta the foreign-private combine. And because of the involvement of private sector candidates, it's certain that corporate lobbies will play a major role. After all, we are talking about influencing decisions in the boardrooms of India's biggest player in the oil and gas sector.

However, Jairam Ramesh, MoS for commerce and industry, tries to dispel the notion that politics is playing a role in the search for ONGC's CMD. "In every establishment (especially public sector), there is a PMO and a PMH (PM/home ministry). In spite of their great professional competence, Subir Raha (the former CMD of ONGC) and Proshanto Banerjee (ex-CMD of GAIL India), were perceived to be PMH appointments. Mercifully, there's no PMH now."

Still, expect many fiery power plays over the next few weeks. It's a tussle for a coveted and a mighty post, a fight for virtual dominance of the oil and gas sector. It's also a battle for undoing ONGC's past alliances and striking new ones. It's also a war that may set precedents for future PSU appointments.