Oil PSUs to be rejigged: PM

Mega merger options to be explored.

Prime Minister Manmohan Singh today said public sector undertakings (PSUs) in oil and gas would be restructured to make them more globally competitive and more professional.

"They (the oil PSUs) have to be more fleet-footed in making use of global opportunities, both on the supply and the demand side," he said, adding the United Progressive Alliance government was exploring the possibilities of restructuring the oil PSUs.

"There is a national consensus on our policy with respect to strengthening of our oil and gas companies," he said in his inaugural address at Petrotech 2005.

Singh said China was ahead of India in planning for securing energy needs for the future. "While the efforts of ONGC-Videsh and Indian Oil Corporation are laudable, there is still some distance our firms have to travel to catch up with the global competition.... We can no longer be complacent and must learn to think strategically, to think ahead and to act swiftly and decisively," he said.

Later in the day, Petroleum Minister Mani Shankar Aiyar said the advisory committee on synergy would be constituted by Monday. The committee will be headed by former Steel Authority of India Chairman V Krishnamurthy.

Aiyar said the committee would examine eight options for consolidation in the petroleum sector. The options include creating one mega-company or two mega-companies by merging Oil India with Indian Oil Corporation and Hindustan Petroleum Corporation and Bharat Petroleum Corporation with Oil and Natural Gas Corporation. The creation of companies on geographical lines was also being examined.

In his address, Singh also said the government was keen on achieving energy security through the intensification of domestic exploration efforts while simultaneously accessing overseas opportunities.

He also said a rational approach to energy pricing was integral to any strategy aimed at improving the efficiency of energy use and reducing the adverse environmental impact of energy consumption.

Singh said accurate demand projection of what the energy mix would be and having a relevant energy pricing mechanism in place were the two key issues that need to be kept in mind while addressing the requirements of energy policy.

"The cost of environmental damage when assessed in terms of loss in potential gross domestic product (GDP), comes to about 10 per cent of GDP. This is alarming and needs concerted efforts for controlling it."