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ONGC: delink govt from pumps: Indian Express
New Delhi, Feb 10: When it comes to downstream petroleum refining and marketing business, public sector undertaking Oil and Natural Gas Corporation (ONGC) doesn`t want to be under the Petroleum Ministry`s thumb.
New Delhi, Feb 10: When it comes to downstream petroleum refining and marketing business, public sector undertaking Oil and Natural Gas Corporation (ONGC) doesn’t want to be under the Petroleum Ministry’s thumb.
So it’s planning a non-government joint venture to free itself from the Ministry’s clutches while setting up, among other things, the much-in-demand petrol pumps. The ONGC proposes — a copy of the proposal is with The Indian Express — to float a special purpose vehicle, ONGC Values Limited, with its equity restricted to 49 per cent ‘‘which can take up independent decisions as a non-PSU commercial enterprise.’’
The proposal makes it clear that the balance equity will also be in the hands of non-government financial institutions such as ICICI Ltd, IDFC and HDFC with neither of the three participants holding more than 25 per cent share.
Sources said the ONGC move was a fallout of the petrol pump scam where government pressure forced the Dealers Selection Boards to appoint a large number of petrol, diesel, LPG and kerosene dealers because of their political linkages and not economic strength.
Another pointer for ONGC has been Petroleum Minister Ram Naik’s verbal directive last Wednesday to government-owned marketing firms Indian Oil (IOC), Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL) and IBP, asking them to put on hold their expansion plans until further orders.
No rationale was given by Naik for curbing the firms’ expansion drive at a time when the sector has been taken out of government control and new private players have launched a blitzkrieg in setting up their retail outlets.
The ONGC proposal now awaits its Board’s approval. Although listed, it couldn’t be taken up at the Board’s meeting last Friday because Subir Raha, ONGC’s chairman-cum-managing director, couldn’t attend as he was indisposed. On paper, the ONGC excuse for freeing itself from the government’s clutches is the new entity’s flexibility in taking quick decisions.
‘‘With market place heating up with the entry of new players in the downstream, strategically located sites capable of offering desired results are in premium. These would require fast and flexible response in diverse ways unlike the ONGC way of asset creation on government-acquired properties,’’ states the proposal.
‘‘Besides land, safety and environment clearances in the speediest manner will be another challenge to cope with so as to be able to put up the facilities and commissioning them in the earliest possible time,’’ it adds.
The government last May gave marketing rights to ONGC, allowing it to set up 600 retail outlets for petrol and diesel. Others who received similar approval are Reliance for 5,849 outlets, Essar for 1,700 and Numaligarh Refineries for 510. The four have to put up 11 per cent of their outlets in remote and low service areas.
Other than putting up retail outlets, ONGC Values would manage the Mangalore Refinery and Petrochemicals Limited (in which it plans to buy majority share) and Mangalore-Hasan-Bangalore product pipeline, set up storage terminals, LPG bottling plants and pipelines.
Bureau Report
So it’s planning a non-government joint venture to free itself from the Ministry’s clutches while setting up, among other things, the much-in-demand petrol pumps. The ONGC proposes — a copy of the proposal is with The Indian Express — to float a special purpose vehicle, ONGC Values Limited, with its equity restricted to 49 per cent ‘‘which can take up independent decisions as a non-PSU commercial enterprise.’’
The proposal makes it clear that the balance equity will also be in the hands of non-government financial institutions such as ICICI Ltd, IDFC and HDFC with neither of the three participants holding more than 25 per cent share.
Sources said the ONGC move was a fallout of the petrol pump scam where government pressure forced the Dealers Selection Boards to appoint a large number of petrol, diesel, LPG and kerosene dealers because of their political linkages and not economic strength.
Another pointer for ONGC has been Petroleum Minister Ram Naik’s verbal directive last Wednesday to government-owned marketing firms Indian Oil (IOC), Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL) and IBP, asking them to put on hold their expansion plans until further orders.
No rationale was given by Naik for curbing the firms’ expansion drive at a time when the sector has been taken out of government control and new private players have launched a blitzkrieg in setting up their retail outlets.
The ONGC proposal now awaits its Board’s approval. Although listed, it couldn’t be taken up at the Board’s meeting last Friday because Subir Raha, ONGC’s chairman-cum-managing director, couldn’t attend as he was indisposed. On paper, the ONGC excuse for freeing itself from the government’s clutches is the new entity’s flexibility in taking quick decisions.
‘‘With market place heating up with the entry of new players in the downstream, strategically located sites capable of offering desired results are in premium. These would require fast and flexible response in diverse ways unlike the ONGC way of asset creation on government-acquired properties,’’ states the proposal.
‘‘Besides land, safety and environment clearances in the speediest manner will be another challenge to cope with so as to be able to put up the facilities and commissioning them in the earliest possible time,’’ it adds.
The government last May gave marketing rights to ONGC, allowing it to set up 600 retail outlets for petrol and diesel. Others who received similar approval are Reliance for 5,849 outlets, Essar for 1,700 and Numaligarh Refineries for 510. The four have to put up 11 per cent of their outlets in remote and low service areas.
Other than putting up retail outlets, ONGC Values would manage the Mangalore Refinery and Petrochemicals Limited (in which it plans to buy majority share) and Mangalore-Hasan-Bangalore product pipeline, set up storage terminals, LPG bottling plants and pipelines.
Bureau Report