The Hindu Business Line : ONGC AGM notice silent on Govt nominees

THE notice sent to the shareholders for the 12th Annual General Meeting of Oil and Natural Gas Corporation (ONGC) on September 21 is silent on the appointment of two additional Government nominees, including the Director-General of Hydrocarbons (DGH), Mr V.K. Sibal, on the company's board.

The Government move to increase its representation on the company's board from the existing two to four had kicked off a storm, with the Chairman and Managing Director of ONGC, Mr Subir Raha, voicing concerns over the proposal.

According to ONGC sources, at present there are three Government nominees on its board and the appointment of two more will take the strength to five.

Mr Raha had threatened to quit if the Government forced more nominee- directors on the company's board. The Petroleum Ministry had proposed appointing Mr Sibal and Mr M.S. Srinivasan, Special Secretary in the Ministry, on the ONGC board but Mr Raha was particularly concerned about the nomination of the DGH since he felt that the Directorate-General being an upstream regulator would lead to conflict of interest.

Subsequently, the Petroleum Ministry sought the views of the Law Ministry on the issue.

Currently, Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd and Indian Oil Corporation (IOC) have three Government nominees on their boards.

In the case of ONGC, the Government had proposed the additional appointments since ONGC is India's most profitable oil company and the Government needed to exercise more control. At present, the ONGC board comprises four nominee-directors (including the IOC nominee), three Government nominees (two from Petroleum Ministry and one from the Department of Economic Affairs), the Chairman, Director (Finance), Director (Human Resources), Director (Offshore) and Director (Onshore). Two posts of functional directors are still vacant.

There were reports that the Ministry wanted the ratification of appointment of new directors to be part of the company's AGM agenda and with Mr Raha opposing the move, there was speculation that the Ministry, which holds 74 per cent stake in ONGC, might vote for Mr Raha's resignation at the AGM once it was able to push through the appointment of two additional directors on the company's board.

With the agenda being silent on the appointment of Mr Sibal and Mr Srinivasan, the ordinary business to be conducted at the AGM includes considering and adopting the audited balance-sheet as on March 31, 2005, and the profit and loss account for the year ended March 31, 2005. The AGM would also confirm the interim dividend and declare a final dividend.

According to sources, the AGM will also consider re-appointments of Mr N.K. Mitra (Director Exploration), Mr N.K. Nayyar (Director Navratna), Mr P.K. Sinha (Government nominee), Mr Sunjoy Joshi (Government nominee) and Mr A.K. Hazarika (Director onshore), on the company's board.

The AGM would also consider empowering the company's board to borrow up to Rs 20,000 crore for business purposes.

DPE backs ONGC

ROUND one of the match between the ONGC Chairman, Mr Subir Raha, and the Ministry of Petroleum and Natural Gas, seems to have gone to Mr Raha.

The Department of Public Enterprises (DPE) on Wednesday upheld the ONGC's position on the additional Government nominees on its Board. The Minister for Heavy Industries and Public Enterprises, Mr Santosh Mohan Dev, said on the sidelines of a conference here that, "We uphold ONGC's position on the additional Government nominee on its Board. Generally it should be two, and we would like it to be adhered to."

Under the existing rules, the maximum number of Government directors on the board of a PSU could be one-sixth of the total strength of the board or two, whichever is lower.

The Petroleum Ministry had written to the DPE seeking its opinion on appointment of additional directors over and above the prescribed two.

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