ONGC's pay fails to lure pros

India's state-owned Oil & Natural Gas Corporation is set to give acting Chairman R S Sharma the role permanently after a 14-month search failed to attract private-sector candidates for a job that paid about $20,000 a year.

Sharma, 56, may win approval from the Prime Minister's Office soon, replacing Subir Raha who stepped down in May 2006, company spokeswoman Narayani Mahil said yesterday. All 71 applications for the job to run India's most profitable company were from executives at state-run companies, Raha said.

Exxon Mobil Corp. Chief Executive Officer Rex Tillerson earns more in two days than Raha did in a year. Oil & Natural Gas says it plans to increase pension and medical benefits because wages are capped at state-run companies, where attrition has increased six-fold in two years.

"It's a very telling commentary on public-sector compensation,'' Raha said in a phone interview from New Delhi yesterday. "Anyone who is working hard is getting daily offers and those who are staying back are guys who don't have any.''

Employee turnover at government companies is impairing growth at a time when non-state rivals are expanding. Since Raha stepped down, Oil & Natural Gas lost its ranking as India's most valuable company to Reliance Industries., headed by Mukesh Ambani, 50, the nation's richest man.

Sharma was refused confirmation in February because the government wanted to attract private-sector applicants, Oil Minister Murli Deora said on February 7.

The government placed advertisements in local newspapers inviting non-government employees to apply for the job. The applicant, at least 45 years old, should have experience in senior management "in a large organization of repute,'' the advertisements said.

Raha retired last year after 35 years in the industry. Oil & Natural Gas's net income in the year ended March 31 was Rs 15,643 crore ($3.9 billion). Irving, the Texas-based Exxon earned $39.5 billion, or 10 times more last year.

Chief Executive Tillerson was paid $4.782 million, including salary and bonuses, or 239 times Raha's pay, according to data on Bloomberg.

In the year ended March 31, Oil & Natural Gas's profit was 43 per cent more than the Rs 10,908 crore at Reliance. A year earlier, Reliance's chairman, Ambani, earned Rs 24,510 crore, according to the company's annual report, or 300 times Raha's pay.

Headcount at Oil & Natural Gas fell to 33,773 as of March 31, compared with 36,700 two years earlier, Human Resources Director A K Balyan said in an interview yesterday.

In the last 18 months, 370 mid-level managers have left, compared with 50 or 60 who would have quit two years ago, he said. Mostly geoscientists and engineers are leaving, with the majority going to the Middle East, Balyan said.

"When people with 10 to 15 years of experience leave, it creates a void. The trend is alarming,'' Balyan said from New Delhi. "It is in critical areas - people who have 10-15 years of experience and command a good market value.''

Graduates recruited out of college typically quit state- run companies after about 10 years, before the companies have earned adequate returns on their investment in the employees, said Ashok Singh, president, Oil Sector Officers Association, which represents 45,000 supervisory staff in state-run oil and gas companies.

"Knowledge migrates to the competitors,'' said Singh. "Instant vacuum is created in the organization."

Singh has petitioned the government to allow companies to spend at least 5 per cent of their revenue on wages from 1 per cent now. Reliance, operator of the world's third-largest oil refinery, spends 8 per cent of sales on salaries, said Singh.

Annual salaries of chief executives of all state-run companies listed on the Bombay Stock Exchange's 30-share key Sensitive Index added up to $81,970 in the year ended March 31, 2006, less than 2 per cent of Reliance Industries billionaire chairman Ambani's pay, according to data on Bloomberg.

"The crisis is already staring at us in the face,'' Raha said. "ONGC is facing problems retaining drillers to work on their platforms. They are either joining private companies in India or going overseas with five times the salary. It's becoming impossible to retain talent.''

Other state-run companies are facing a similar situation. Mahanagar Telephone Nigam, a state-run operator of phone services in New Delhi and Mumbai, lost 11 percent of its employees in the last four years, according to Bloomberg data. Bharat Heavy Electricals, the biggest electrical equipment maker, lost 10 per cent of its employees to 42,601 as of March 31, 2006.