The Hindu Business Line : Hunt for new Petronet chief begins

New Delhi, Aug. 4 With Mr M.S. Srinivasan demitting office as Secretary, Petroleum on July 31, the hunt for new Chairman of Petronet LNG Ltd (PLL) has begun. The board of PLL is expected to invite the new Petroleum Secretary, Mr R.S. Pandey, to take the position, in keeping with the norm followed since the incorporation of the company. However, it is up to the Petroleum Secretary to accept or decline the invitation.

The four public sector undertaking promoters of PLL have been envisaging interest in holding the position of the Chairman on rotation. Sources told Business Line that the PLL board has decided to invite the newly appointed Petroleum Secretary, to fill the vacancy of an independent director and post of Chairman created by Mr Srinivasan’s retirement.

However, GAIL (India) Ltd, one of the promoters of Petronet and also in direct competition for sourcing LNG, is said to be seeking appointment of future Chairman from among the four chiefs of the promoter PSUs.

Appointment norm

As per the Articles of Association (AoA) of PLL, its board invites the Secretary Petroleum to become the Chairman and in the event of the Secretary declining the request, the search committee of the board will have to find an independent director and then select a chairman among the board members, he said.

“During the time of IPO the company had taken the stock market regulator SEBI’s approval to consider the Petroleum Secretary as an independent director. Hence, if PLL has to consider appointing PSU chief as the Chairman, then the company will not be fulfilling the requirement of one-third independent directors prescribed by SEBI, as the PSU chief is not considered as an independent director,” sources added.

Shareholding

Petronet is a venture with four PSUs (ONGC, Indian Oil Corporation, Bharat Petroleum Corporation, and GAIL) holding 12. 5 per cent stake each, GAZ de France 10 per cent, ADB 5.2 per cent, and financial institution and general public 32.8 per cent. The PLL board comprises 15 members including a non-executive Chairman. The board of PLL has five independent directors including the Chairman, a nominee each of the four public sector promoters, three whole time directors, and one representative each of stakeholders Gaz de France, Asian Development Bank, and a nominee of Gujarat Maritime Board.

Besides, it also needs to be seen that what additional inputs a PSU chief as a Chairman will bring to the company, industry insiders said. While the AoA gives a wide gambit of powers to the four PSUs in PLL, as per the general sales and purchase agreement the four PSUs have the right to conduct joint audit of the company every three years.

Besides this, according to the AoA of the company, the four PSU nominees currently also enjoy an exclusive right of an affirmative vote, without which no major decision of the company can be taken. Any investment decision, loans or budget decision can be taken only when all four nominees agree, sources said. Also as per the AoA, without the affirmative vote no director can be appointed and no asset can be divested.

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