The petroleum ministry has come out openly against any piecemeal disinvestment in Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC) and Gas Authority of India Ltd (GAIL) and wants the government to retain "full control" over them to meet any exigency after the dismantling of the administered pricing mechanism in the oil sector.
In a communication to disinvestment secretary Pradip Baijal, petroleum secretary Vijayendra N Kaul has said that there is no justification to carry out piecemeal sale of shares of these companies. Instead, the government should clearly state its wish to maintain its equity in the three companies till a decision can be taken on their merger or integration.
Kaul has said that the three companies should work out a cohesive strategy for operating in the deregulated scenario. In this regard, a coordination committee of the chairmen and managing directors of ONGC, IOC and GAIL, and the petroleum secretary has already been formed with petroleum minister Ram Naik as chairman.
"There is an immediate need to forge a strategic alliance amongst the three companies at the present juncture. Any formalisation of this arrangement by means of merger among the three companies can be considered in future depending on the experience gained and a detailed study of the consequences of such a move as well as the working of the markets in a deregulated scenario," Kaul has said.
Emphasising the need for the alliance, the secretary says that the oil sector is a critical sector on which the entire economy of the country depends. "The Cabinet also shared this view and it was decided that ONGC, IOC and GAIL would be retained in the public sector with a minimum 51 per cent government equity."
According to the secretary, "at this juncture, it is imperative that the government has full control over ONGC and IOC to get any special resolution passed so that it is possible to give directions, if necessary, and ensure compliance on sensitive issues like the transfer price of crude oil and the selling price of products in the international market which may lead to public discontent within the country."
