The Hindu Business Line : Time to restructure oil PSUs, says PM

The Prime Minister, Dr Manmohan Singh, with (from left) the CMD of GAIL, Mr Prashanto Banerjee; the Minister for Petroleum and Natural Gas, Mr Mani Shankar Aiyar; the Petroleum Secretary, Mr S.C. Tripathi; and the CMD of ONGC, Mr Subir Raha, at the Petrotech meet in the Capital on Sunday.

New Delhi , Jan. 16

THE Prime Minister, Dr Manmohan Singh, on Sunday said the Government was looking at the possibility of restructuring of the oil PSUs on a priority basis, with a view to making them globally competitive.

"We can no longer be complacent and must learn to think strategically, to think ahead and to act swiftly and decisively," Dr Singh said inaugurating the Petrotech Conference-2005 here.

The Prime Minister said the move required a greater degree of professionalism in the management of country's oil and gas PSUs and in formulation of energy security strategy, he said.

Energy security

The Prime Minister said for meeting the burgeoning demand for petroleum and gas, the Government had completely opened the exploration and production sector for private participation. He said the fifth round of bidding was launched on January 4 offering 20 blocks for exploration of oil and natural gas.

Dr Singh said rational pricing of energy was a critical aspect of energy policy and a vital element of energy security for the country.

"The introduction of pricing in the demand model is important as it is the critical factor that will help in not only ascertaining the correct pattern of energy mix but also enabling a better demand forecast for each energy type," he said.

He said India was not blessed with the luxury of abundant fossil fuel resource and, hence, had to step up the efficiency of energy consumption to moderate the impact of growth on the demand for energy. "Clearly the challenge before us as a nation is to meet energy needs of all segments of the population in an efficient and affordable manner ensuring long-term sustainability and environmental protection,'' he said

High-tech biz

The Prime Minister said apart from pricing and sourcing, technology is another area that requires special attention.

"Technology today is driving business in the hydrocarbon sector and has transformed the oil industry from a commodity business that it once was to a high-tech industry," he said.

The Prime Minister hoped new rounds of bidding would contribute in a major way towards a comprehensive exploration of the Indian sedimentary basin and also catalyse private investments.

He said while efforts of ONGC-Videsh and Indian Oil Corporation are laudable, there was still some distance the firms had to travel to catch up with global competition.

"I urge our oil and gas PSUs to think big, think creatively and think boldly. They have to be more fleet-footed in making use of global opportunities, both on the supply and demand side," he said.

Advisory panel set up

THE Petroleum and Natural Gas Minister, Mr Mani Shankar Aiyar, said an advisory panel has been constituted to look into the restructuring of public sector oil firms and the first meeting of the committee would be held on January 24.

The six-member Advisory Committee on `Synergy in Energy' would be headed by the National Advisory Council member, Mr V. Krishnamurthy, and it would look at options of merging two or more companies to create oil behemoths that have financial capabilities to match the Chinese firms in the international arena, Mr Aiyar told reporters on the sidelines of the conference.

The options to be studied by the panel include merging all oil PSUs into one mega firm or creating two oil behemoths by merging Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd with Oil and Natural Gas Corporation and Oil India Ltd with Indian Oil Corporation.

Another option would be to keep the oil companies as they are but devise a management structure that coordinates PSU efforts, he said. Merging all the oil PSUs would create a big company, which will get 34th position on the Fortune 500 lift of global majors, he said.

The advisory panel includes the former Disinvestment Commission Chairman, Mr G.V. Ramakrishna, the former Advisor to the Finance Minister, Mr Vijay Kelkar, the former ONGC Chairman, Mr B.C. Bora, and the former BPCL Chairman, Mr U. Sunderajan.

The Petroleum Minister said the committee has not been given a precise time-frame to submit the report.

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