Sibal nomination withdrawn

In the wake of opposition from the law ministry and department of public enterprises, the petroleum ministry has withdrawn a proposal to appoint additional government directors on the board of Oil and Natural Gas Corporation.

Petroleum Minister Mani Shankar Aiyar, who in April this year had proposed appointing additional directors including director general of directorate general of hydrocarbons (DGH) V K Sibal on ONGC'S board to bring in technical expertise, issued an order earlier this week withdrawing their nomination.

The move comes after DPE upheld ONGC chairman Subir Raha's stand that the number of government directors cannot be raised to four. The law ministry too endorsed Raha's view that Sibal's appointment was in conflict with his role as the upstream regulator.

The proposal to appoint additional directors, including Sibal, on ONGC'S board had generated a major controversy with Raha threatening to resign.

The ONGC chief had also made a reference to interference by ministry officials in the company's functioning at its annual general meeting on September 21.

"A listed company, even in the public sector, remains a listed company, not a department. Companies are governed by the Companies Act, departments are administered under executive rules and procedures," he had said in the AGM.

Last week Aiyar clarified that he did not initiate the proposal to appoint Sibal and blamed bureaucrats in his ministry for the controversy.

Heavy Industries Minister Santosh Mohan Dev too had publicly endorsed Raha's view that the number of government directors on company board cannot exceed two.

Raha had threatened to resign over what he termed as "intimidation" by petroleum ministry officials in pushing for appointment of Sibal and M S Srinivasan, special secretary, ministry of petroleum and natural gas.

DPE officials had said that under present rules the maximum number of government directors on board of a PSU could be one-sixth of the total strength of the board or two, whichever is lower.

Following the standoff with Raha, petroleum ministry had written to DPE seeking its opinion on appointment of additional directors over and above the prescribed two.

The petroleum ministry had also sought law ministry's views on appointment of Sibal on ONGC board as Raha had claimed it was a conflict of interest for a sector regulator to sit on the board of the company he is supposed to regulate.

Sources said the law ministry also endorsed Raha's contention and has informally told the oil ministry that any regulator, even if it does not enjoy statutory powers, cannot sit on the board of a company.

Petroleum ministry had contended that DGH was not a full regulator and was only government's technical arm for upstream oil and gas exploration and production business as it did not have statutory powers.

But Raha had contested the view, saying DGH was the adjudicator in all production licenses and regulates the e&p business.