On paper, it’s a slick idea. To merge some of the State-controlled companies and create a giant integrated oil corporation that can take on the Exxons and Chevrons of the world, as finance minister Arun Jaitley has proposed in this Budget.

But on ground this will be a challenging proposition to pull off – especially the manpower integration. Indeed, 12 years ago when the Synergy in Energy idea was first proposed, it went nowhere because of the complex labour issues involved.

However, this time around, some interesting solutions are emerging, notably, the creation of an India Energy Service. Will it help?

Drilling down In 2005, a committee headed by V Krishnamurthy to take the Synergy in Energy idea ahead concluded that merger may not be advisable, largely because of manpower challenges. In its report it stated, “Faced as we are with rising unemployment in organised industry, any sizeable reduction in the labour force is inconceivable. The need is to make the labour force more productive and efficient.” It suggested creation of a holding company or setting up a coordinating body.

RS Sharma, former Chairman and Managing Director of ONGC, one of India’s largest public sector oil companies, who was Director - Finance at the PSU when the issue was first debated, also opposes a merger. He says that will lead to all existing companies losing their identities as well as cause a clash of cultures and throw human resources into disarray.

Sharma, who was also non-executive Chairman of ONGC Videsh Ltd – the overseas investment arm of ONGC – and refinery firm Mangalore Refinery and Petrochemicals Ltd, thinks a holding company concept may work out better. According to him, this will optimise resource-sharing and save costs upfront by 10-15 per cent. It will also yield huge disinvestment proceeds for the government. Market dynamics and volatility will be well addressed by this structure, which he believes is the least disruptive model for implementation.

India Energy Service Some like energy expert Narendra Taneja believe the answer to smooth integration could be the creation of an India Energy Service (IES).

Taneja, who is preparing a paper to present to the Prime Minister’s Office, says: “The energy sector is going to be the fastest growing one over the coming years and decades, as the national economy grows and the cry for more and affordable fuels, power and renewables. He points out that today, the overall management of the energy sector, barring renewables, is still dominated by the old Soviet-style approach, style and culture. “This has to change. IES can be built and can maintain a bank of world-class managers, specialists trained to run energy enterprises,” he adds.

Both public and private sector energy businesses can source their key managers from such a dedicated service, he says. IES could draw some features from IAS and even the IFS, but must be jointly owned and run by the Union Government and a consortium of energy companies, he adds. In other words, it should be independent and have its own unique existence and structure.

Create two divisions Yet another idea comes from VC Agrawal, former Director - Human Resources, Indian Oil Corporation, who was involved in the merger of IBP Co Ltd with IOC. He says, “Such a proposal has two components – integration of business and integration of people. The two can be linked. For example, when a company, which is primarily into oil and gas exploration (upstream activities, such as ONGC, Oil India), and a company, which is into petroleum refinery and retailing (downstream, such as Indian Oil, HPCL) are integrated, it can be done by creating divisions.” He adds, “Creation of divisions will also ensure that right-sizing of manpower is not an issue.”

It’s early days yet. But integration – whatever the method followed – will definitely disrupt people in the PSUs.

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