Govt dilly-dally leads to substitute chiefs at ONGC, IOC
Mumbai 31-Jan-2011
India's most profitable company, ONGC, will function without a full-time chairman from Tuesday, while the top-ranker in turnover, IndianOil is bracing for its second successive make-shift chief executive as political changes along with allegations of corruption and forgery have dogged top appointments of state energy firms for months.
Industry officials say companies that ensure India's energy security need empowered chief executives who have a longer -term stake in the firm and are not stop-gap or acting chairman on the verge of retirement. The delay is setback for energy companies that plan to raise Rs. 33,000 crore from the market in the coming months but face a challenging business environment in which they bear the burden of selling fuel cheap after refining costly crude oil, with no clear policy of government reimbursement for such loss-making sales.
For 11 months, IndianOil, the top state-run refiner that dominates the retail fuel market, has been run by acting-chairman BM Bansal, who retires on January 31. If the government does not appoint the new chairman, its director of finance, SV Narasimhan, who is also approaching retirement, will hold the charge. The Public Enterprises Selection Board (PESB), which interviews candidates for top jobs in state firms, has recommend RS Butola, who heads the overseas arm of oil explorer ONGC.
In the case of ONGC, Chairman RS Sharma, who retires on Monday, is likely to be temporarily replaced by the company's director (onshore) AK Hazarika as the government has still not chosen a chief executive since October, when PESB named ONGC's director for offshore operations, Sudhir Vasudeva, as its choice to succeed Sharma. Its second preference was RK Tyagi, who heads Pawan Hans Helicopters Ltd, a state-run firm with a fleet of 41 helicopters that are used mainly to ferry ONGC's staff in offshore operations and at times for other purposes like flying pilgrims to Vishno Devi, Kedarnath and Amarnath. ONGC is its biggest customer and holds 21.5% in the company.
The recent cabinet reshuffle in which Jaipal Reddy replaced Murli Deora as oil minister is adding to the uncertainty about the appointment. Government officials familiar with the process say the new minister may be consulted before the chief executives are appointed. A government official said the former oil minister had cleared both the appointments. Another twist in ONGC chairman's selection is a letter that appeared to be written by Rajya Sabha MP Tapan Sen to the prime minister and the chief vigilance commissioner (CVC) alleging corruption by an aspirant for ONGC's top job. An oil ministry official, who did not want to be named, said the MP has written to the government saying that the letter was forged. "Based on the letter, the chief vigilance officer of ONGC has cleared Vasudeva from the charges," he said.
Mr. Sen, who was travelling, could not be contacted but his secretary said the complaint letter was forged. "We told the government and the vigilance commissioner that the complaint against Mr Vasudeva was not made by Mr. Sen and the letter was forged," Mr. Sushanto Ghosh, who works in Mr. Sen's office told ET. Clearance from the chief vigilance commissioner is a key part of the selection process. The PESB's recommendation was sent to the appointment committee of the cabinet (ACC), chaired by the Prime Minister, who takes the final call. But before final announcement is made, the government checks the integrity of shortlisted candidate and gets its validated by the CVC.
Standing Conference of Public Enterprises (Scope), the apex body of state-run firms, says timely appointment of chief executives is vital. The body's director general and former CMD of Gail India, U D Choubey said that the government should have a succession plan. "A care-taker chairman is always uncertain about his future so he can't have the same vision as a (full-term) chairman would have," he said.
