The petroleum ministry's efforts to push a Cabinet note on 'India Hydrocarbon Vision -- 2025' have come a cropper with the Cabinet Secretariat returning it to the ministry.
In a recent communication to the petroleum ministry, the Cabinet Secretariat has said the note could not be placed before the Cabinet for approval since the process of inter-ministerial consultations on it is still incomplete.
"It would be appropriate if the views of the concerned ministries and departments are obtained and the same together with the comments of the ministry of petroleum and natural gas thereon suitably incorporated in the note," the Cabinet Secretariat said.
This is the second time that the Cabinet Secretariat has offered this advice to the petroleum ministry which has been keen on receiving a speedy approval to the India Hydrocarbon Vision -- 2025 in view of the impending decontrol of the oil sector from April 1, 2002.
The Cabinet Secretariat has also taken strong objections to the inclusion of some of the operational matters in the Cabinet note, saying that many of these issues are already in an advanced stage of implementation. Moreover, "some of the policy issues have also specifically approved by the Cabinet and the Cabinet Committee on Economic Affairs in the past," it pointed out.
Returning "54 copies" of the Cabinet note to the petroleum ministry, the Cabinet Secretariat has asked it to submit "55 copies" of the revised note.
India Hydrocarbon Vision -- 2025 has suggested that industrial restructuring in the petroleum sector should be undertaken to maintain long-term profitability and strengthen the competitive edge of the oil companies in the face of increased competition.
The high powered group, that prepared the report, has suggested that to achieve these objectives, the government should announce a policy in regard to specific public sector units (PSUs) enterprises in alignment with the overall disinvestment policy of the government. The internal restructuring of the oil PSUs should be completed by making full use of information technology, it added.
The group has recommended that all the proposals of mergers and alliances of the oil PSUs should be implemented with the objective of enhancing shareholder value.
It has also said that the disinvestment in oil PSUs should be taken up in a phased manner and the government holding in these PSUs should be brought down to an appropriate level to realise the best shareholder value.
The government should adopt a transparent bidding process for mergers and acquisitions by the national oil companies.
The nature of the petroleum market also needs to be changed from being a closed club of limited players to a more open system which allows entry by more private sector players and independents. Regarding the selection of partners for mergers, establishment of transparent bidding processes in all the transactions are needed and these exercises should be oriented towards increasing competition, the group has said.
Stating that the existing conditions for entry into the marketing sector were hindering the development of a free market, the group said these issues needs to be re-examined urgently.
It said as long as a company remains under government control, complete operational and strategic autonomy would not be possible and the PSU would be subject to various, and at times, conflicting goals.
The government may retain ownership in one of the upstream PSUs like ONGC, and one of the downstream PSUs like IOC and a gas company like Gail, till the time the market adjusts to the deregulated scenario.
