Panel rejects plan for oil PSU merger

Transfer govt holding in blue-chip PSUs into a trust: Panel.

Nixing the petroleum ministry's proposal for the creation of a single public sector oil company, the Synergy in Energy panel led by V Krishnamurthy today suggested transferring the government holding in blue-chip PSUs into a trust.

The proposed National Shareholding Trust, on the same lines as Temasek in Singapore and Khazanah in Malaysia, will pool in the government holding in the navratna and mini-ratna oil PSUs to ensure that they are professionally managed with enhanced autonomy. A similar proposal was discussed during the previous government's tenure.

The panel also proposed a merger of stand-alone subsidiaries, except Numaligarh Refinery Ltd, with the parent companies, unbundling the supply and transport services of Gail (India) Ltd and the creation of new entities for inter-state transmission of gas and other activities like fertiliser and power.

The advisory committee recommended that Oil India Ltd take the lead in setting up Oil India Videsh Ltd (OIVL) with a consortium approach to further India's hunt for oil globally.

While ONGC Videsh should focus on large assets with production of over 2 million tonnes of oil equivalent annually, the new entity should work in other demarcated areas. Over the next three years, overseas ventures should meet at least 15 per cent of the crude oil import needs, it added.

For greater flexibility, the committee proposed an enhancement in OVL's investment limit from Rs 300 crore to Rs 2,000 crore, while OIVL should have powers to invest up to Rs 1,000 crore.

"In addition, for exploration and production activities in case of successful overseas bidding, there may be no ceiling on investments for incorporating a company as a subsidiary or a joint venture," it said.

The panel said there was a need for management restructuring in Oil & Natural Gas Corporation and the OVL managing director should be appointed as the parent company's vice-chairman and managing director.

A similar set-up for Indian Oil Corporation has also been suggested. It also said oil PSUs should have fewer functional directors and there should be a maximum of three government nominees on each board.

Instead, it said, the government should look at strengthening the existing structure of oil PSUs through policy measures. These included setting up of a separate energy ministry and a Cabinet committee on energy headed by the prime minister and a unified energy ministry in the long run.