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With ONGC diversifying into non- core areas like power and fertiliser, Petroleum Secretary Vivek Rae today said the nation's high profit making PSU should sell its non-core assets and concentrate on increasing oil and gas production.
"Our oil companies are wanting to rush into every fields - from upstream (oil and gas exploration and production) to downstream (refining and marketing) to midstream (transportation and storage business). We are not sure if that is the right thing to do," he told addressing the Energy Security Conference organised by CII here.
As a result, oil producer Oil and Natural Gas Corp (ONGC) is now operating power plants, bought a refinery, opened petrol pumps and is planning a fertiliser unit, while refiner Indian Oil Corp (IOC) is taking upstream exploration blocks.
Rae asked if ONGC should to start operating petrol pumps and selling petrol and diesel instead of focusing on finding and producing more oil and gas which was of more vital importance for an energy deficit country like India.
"That is an important issue on which there is no clear decision that has been taken in the matter. And sometime what happens is that in the process of a drift, you drift into everything, you set up fertiliser plants, you set up power plants, you set up petrol pumps and so on. But then the question is what is our core competence, what is your core mandate. And are you diluting your core competence and your core mandate by moving away," he said adding there were no clear answers to these.
Rae said companies like ONGC which have financial muscles can set up a power plant in Tripura or set up a fertiliser plant to monetise the gas for which there are no takers. It can also take over Mangalore Refinery and then turn it around.
"But in my opinion, ONGC should monetise these assets quickly through its resources and then divest. So monetise and divest that should be the mantra," he said. "You are generating wealth in the country out of dead assets. Once they are viable you divest and you get your money back and you move to others."
This way, a company like ONGC can generate enough return on its capital as well as keep its focus on its core competence of oil and gas exploration and production.
Rae however said his suggestion to ONGC top brass to divest their non-core assets have not generated favourable response so far.
ONGC's diversification into non-core business like fuel retailing, oil refining and petrochemicals had even previously raised eyebrows in the oil ministry and the company had to briefly go slow on these projects. But it has again started these.
