Allow 100% equity by foreign airlines: Report

DEATH AT SEA - 4

The three-member enquiry committee, led by former petroleum secretary T S Vijayaraghavan, set up to investigate the crash of an ONGC helicopter off a rig in the Arabian Sea on August 11, has suggested that 100 per cent foreign investment, including by foreign airlines, should be allowed in non-scheduled services such as chartered aircraft and helicopter operations.

This would allow corporations like ONGC to choose from the global best when hiring helicopters for offshore operations.

Under the current policy, the report observed, "ONGC is cabined, cribbed and confined to marshal its needs from PHHL [Pawan Hans Helicopters Ltd] and domestic operators of small status. Insecurity is native to such a situation...".

The committee, which submitted its report to the government in March this year, has also suggested that the government should disinvest in PHHL (in which it holds a 78.5 per cent stake, ONGC holding the rest), induct a strategic partner and then go in for an initial public offer. At present, PHHL derives 60 per cent of its profits from ONGC.

As of now, foreign airlines are not permitted to pick up equity directly or indirectly in domestic air companies.

Under the current policy, if a foreign airline operates in India the responsibility to ensure safety of the aircraft vests with the country in which it is registered and is outside the purview of the Director General of Civil Aviation (DGCA). "Such an operation is termed 'cabotage' and is not permitted anywhere," the report said.

Indian operators can, however, lease aircraft from foreign companies, but the government only permits "dry-lease," which requires the aircraft to be registered in India and certified by the DGCA as airworthy. Wet lease with foreign registration and crew is only allowed in exceptional circumstances.

Although the committee concedes that the MI-172 is a reliable craft, and before August 11, the helicopter "had had an accident-free record with over 10,000 flying hours for ONGC since 1997", it points out that PHHL's performance has been "erratic and unreliable".

It observed that ONGC was "put to discomfiture whenever the MI-172 chartered from PHHL in April 2002 was grounded." A second MI-172 that ONGC hired from PHHL in July 2002 on stand-by or "call out" was also unserviceable for lack of spares.

"ONGC was therefore driven to cancel the Call Out arrangement in December 2002...after turning to other alternatives to do duty".

This is the background against which the ill-fated helicopter was hired from Mesco on terms that the committee has suggested were less than optimal.

Meanwhile, sources in ONGC have said that the corporation has now taken several measures on safety. For example, an internationally recognised Canadian company is training 40 to 45 ONGC officers every month on safety issues.

They also point out that ONGC's safety measures have received international recognition. Last year, for instance,the company paid $51 million as insurance premium. The amount has come down to $25 million in 2004-05, which shows the increasing confidence of international insurance firms in ONGC's risk capability.

(Concluded. The first three parts of this series appeared on September 10, 11 & 13)