ONGC

 

To

Shri Rajiv Gauba

Union Cabinet Secretary

Dear Shri Gauba,

I have cautioned the government several times on the need to strengthen the CPSEs from the point of view of promoting the country’s self-reliance, rather than weaken and privatise them.

The way the government has dealt with the Maharatna oil behemoth, the ONGC is a case in point.

In particular, I refer to the news report, https://economictimes.indiatimes.com/industry/energy/oil-gas/ongc-prepares-for-3rd-interim-chairman-in-a-row-9-shortlisted-for-top-job/articleshow/93687954.cms which indicates how the company has been allowed to function headless for 17 months, with “interim Chairpersons” managing its affairs.

For the government to deal with the ONGC in such a cavalier manner makes a mockery of the idea of promoting self-reliance in the field of hydrocarbons development, a driving force that compelled the then Prime Minister Nehru, more than six decades ago, to repose trust in Shri K D Malviya, another visionary, who in turn created the institution of the ONGC in 1955, initially as a directorate of the GSI and later as an independent Commission in 1956. As a person who had the privilege of working under the guidance of Shri Malviya during his second term (1970s), when he was the Union Minister of Petroleum & Natural Gas, I am aware of the care and sensitivity with which he had nortured the oil CPSEs, especially the ONGC, his brainchild.

It is unfortunate that those who have succeeded them should fail to imbibe the same spirit of pride in self-reliance. Instead, they seem to be taking measures that would weaken the ONGC deliberately and promote less competent private sector agencies to mishandle the valuable hydrocarbon resources of the country. Anyone aware of the historical background of the ONGC will realise the injustices done to the ONGC again and again, that has hurt the national interest in a considerable measure.

I had cautioned the government around 5-6 years ago not to cripple ONGC’s finances by forcing it to buy the majority equity share in debt-ridden Gujarat State Petroleum Corporation (GSPC), another State PSU mishandled by the Gujarat government in an equally callous manner. Copies of my letters should be available in your office.

It is in public knowledge how the successive governments have tried to hurt the interests of the ONGC repeatedly, by allowing private companies to enter the strategic sector of hydrocarbons development, an exercise that has failed miserably in fulfilling the ostensible expectation of ramping up the country’s oil/gas production. The entry of the private sector has merely weakened the role of the ONGC. A couple of years ago, the government had even come up with the bizarre idea of “hiving off” the ONGC’s Bombay High offshore oil/gas fields to foreign companies, a measure that would literally dismantle the ONGC’s operations, which I had questioned at that time in my letters, which can be accessed at

https://countercurrents.org/2022/01/not-in-the-national-interest-to-weaken-the-ongc/

https://countercurrents.org/2021/11/the-governments-latest-decision-to-hive-off-ongcs-prime-oil-gas-fields-to-foreign-companies-highly-imprudent/

Even now, as if the ONGC is not competent enough, the government is in the process of giving away many oilfields explored by the ONGC to private companies, having little experience and capacity.

This is just not the end of the travails of the ONGC.

Instead of encouraging the ONGC to build the country’s muscle in hydrocarbons development and become a world leader, the government, for reasons best known to it, has forced this profit-earning company to part with its investible resources by compelling it to declare unconscionably high dividends, the lion’s share of which would go to fill the coffers of a fiscally imprudent government. For example, during the timeframe, 2014-15 to 2021-22, ONGC was forced to divert its profits by way of dividends to the extent of Rs 60,773 Crores, which amounted to 45-50% of its profits, which in turn eroded the capacity of the company to explore and develop many greenfield sites across the length and the breadth of the country. At a time when India’s self-reliance in oil has been on a steep decline, the import bill in the face of an exchange rate hurting the rupee badly, it is all the more necessary for the government to strengthen the ONGC in its efforts to add to the hydrocarbons deposits it has both in India and overseas, that would help step up oil/gas production. The extent to which India can reduce its dependence on oil imports will have a constructive impact on its foreign policy options.

India can draw a useful lesson from China which consciously nurtures and develops its state-owned enterprises in oil/ gas not only to step up its domestic production but also to operate globally.

It is against this background that one should view the inordinate delay that the government has allowed to take place in selecting the head of the so-called Maharatna company for more than 17 months.

It perhaps fits into the overall disturbing pattern that seems to be emerging today, in which there is an effort, deliberate or otherwise, to weaken all those CPSEs which stand entrusted with the responsibility of developing the country’s valuable natural resources and become world leaders in their respective areas of expertise.

Looking at what is happening to CPSEs like the ONGC and the CIL, one cannot but draw the inference that very soon even such CPSEs which symbolise India’s self-reliance will come under the harsh anvil of disinvestment, as a part of DIPAM’s mindless effort to put the assets and the wealth of the nation to a distress sale, all leading to a few big business houses, who have neither the experience nor the capacity to deal with such scarce precious natural resources in furtherance of the public interest.

I would earnestly request you to show this letter to the Prime Minister and his Cabinet colleagues, as it  is a matter of serious public concern.

In particular, I request the government to shift focus away from disinvestment of the CPSEs and the ongoing effort to monetise their assets, towards a strategy aimed at strengthening and empowering them in all respects.

Any further delay in appointing a full time Chairman for the ONGC would hurt the country’s effort to add to its hydrocarbons resources inventory and take it nearer the formidable goal of self-reliance.

Regards,

Yours sincerely,

E A S Sarma

Former Secretary to Govt of India

Visakhapatnam


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