Poshan

Panel against merger of oil PSUs

Panel against merger of oil PSUs
outlookindia.com
-0001-11-30T00:00:00+0553
New Delhi, July 11 (PTI) A high-level panel on recast of public sector oil firms is not in favour of mergers to create behmoths and has instead suggested greater autonomy by transfering government shareholding in oil PSUs into a professionally managed trust.

The Advisory Committee on Synergy in Energy headed by V Krishnamurthy, which today submitted its report to Petroleum Minister Mani Shankar Aiyar, was of the view that mergers and consolidations worldwide occured during times of low oil prices and were instruments of eliminating excess workforce and duplicate facilities.

"Any merger in the Indian context which would result in reduction of manpower shall not be feasible," the report said.

It suggested transfering government shareholding in blue chip oil PSUs to a National Shareholding Trust, run at an arms length from government by a professional board.

The Committee also suggested aggressive acquisition of oil and gas fields abroad by creation of an organisation parallel to present flagship ONGC Videsh Ltd. The new firm may be lead by Oil India Ltd with refiners Indian Oil Corp and GAIL participating in it.

"Overseas E&P should be pursued aggressively by targeting at least 15 per cent of crude oil imports through the equity oil route within next 2-3 years," it said.

Stressing on the need for an integrated energy policy, the Committee suggested setting up of Cabinet Committee on Energy and ultimately an Energy Ministry.

Aiyar said his ministry would examine the report in six weeks time.

Aiyar had created the panel to suggest consolidation of oil PSUs, possibly into one or two mega corporations, so as to cut down 'destructive' competition. The idea mooted in January was to merge refiners BPCL and HPCL with exploration major ONGC one the one hand and OIL with IOC on the other to create two oil behmoths. It however wanted subsidiaries of oil PSUs to be merged with the parent firm - like merger of Kochi refinery with BPCL and Chennai refinery with IOC.

"There is strong merit in ensuring continuance of the existing structure in the oil PSUs in their areas of core strength," the committee said.

It shot down the idea of giving equity in OVL to state- run firms having overseas aspirations and instead wanted a new firm under OIL to be created for accomodating them.

For overseas hunt, it suggested the OVL concenrate on larger acquisitions, leaving smaller fields (yielding less than two million tonnes of oil annually) for OIL-led consortium to be called Oil India Videsh Ltd.

The Panel wanted the resent limit of investment of upto Rs 300 crore by OVL to be raised to Rs 2000 crore while OIVL be delegated power to invest upto Rs 1000 crore without Government approval.

Suggesting intensifying of domestic exploration and production, the committee recommended that upstream firms should segregate non-core activities and form them into separate entities.

The committee recommended that domestic exploration and production needed to be intensified by applying the latest technology particularly in the frontier basins and deepsea areas.

The six-member panel called for unbundling the supply and transport services of state-owned gas utility GAIL. "Unbundling of a gas monopoly in specific terms is required to facilitate competition and to reduce conflict among entities." "Government's intervention should be strategic in nature and the state should not be involved in micro management of PSUs. The performance review of the PSUs should be in the form of informed overview like peer reviews, and the current system of parliamentary review may be restricted to the discussions on the peer review report," the Committee said.

It suggested oil PSUs being allowed to devise attractive voluntary retirmenet scheme (VRS) packages.

The Panel suggested introduction of price stabilisation fund to regulate petrol and diesel prices and creation of strategic reserves of atleast 10 million tonnes.

It also called for review of current conditionalities for grant of marketing rights for transport fuel. A license to sell petrol and diesel currently is conditioned to Rs 2,000 crore investment in oil infrastructure.

It wanted the upstream regulator Directorate General of Hydrocarbons to be strengthened. "DGH should have its own modes of funding and recruiting personnel. It is also desirable that the regulator of the upstream sector should not be represented on the board of directors of any company." "For the downstream sector, the Committee recommends early setting up of the proposed Petroleum and Natural Gas Regulatory Board. When in position, PNGRB should carry out the regulatory functions including that of third party access to common carrier facilities," the report said.

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