ONGC's Raha may be told to put in papers

Oil and Natural Gas Corporation Chairman Subir Raha may be forced to demit office on September 21 if his resistance to the petroleum ministry's interference turns into a plebiscite at the firm's annual general meeting in which the ministry is likely to vote for his ouster.

A joint secretary, representing 74 per cent government shareholding, might vote for Raha's resignation at the AGM once the ministry was able to push through appointment of two additional directors on the ONGC board, a top ministry official said.

Raha has opposed the appointment of two new directors as the company already has three government directors and one of the new ones proposed, the Director General of Hydrocarbons, is the sector regulator. It will be a conflict of interest if a regulator is on the board of a company being regulated by him.

Faced with Raha's opposition, the ministry wanted the matter to be taken to the AGM but the chairman planned to table his resignation if the ministry's proposal was passed as the appointments would be in violation of the corporate governance norms, the official said.

The ministry representative plans to immediately second Raha's resolution.  Raha has already written to Petroleum Minister Mani Shankar Aiyar on resolutions likely at the AGM.

Petroleum secretary SC Tripathi declined to comment saying "These are internal communications... We will let you know when a decision (on them) is taken."

Recognising the regulatory role of the DGH for the upstream business, the ministry is engaged in setting up a separate regulator for only the downstream oil refining, gas, retailing and pipeline transportation business.

Raha in his August 22 letter to Aiyar said the government directors "attempted to intimidate" him on the issue of appointment of additional directors and were treating public sector firm as their "fiefdom."

He said the appointment of new directors was against the government's own stated policy that the number of government directors on a PSU board should not exceed two in any circumstances.

The official said the ministry has sought opinions of the ministries of law and finance and deparatment of public enterprise on increasing the number of government directors on the ONGC board as it was a very valuable company and the government should exercise greater control over it.

Tripathi, the official said, as a way out has suggested that ONGC appoint DGH as government director for two months and he would withdraw him thereafter.

But Raha is unrelenting saying appointment of DGH was against the corporate governance norms.