09-05-2005, 02:48 AM
<b>Aiyar vs Raha: who will finally rule over ONGC</b>
NEW DELHI: The simmering tension between petro minister Mani Shankar Aiyar and public sector ONGC chairman Subir Raha is fast approaching a flashpoint. A confrontation is in the works and fireworks are expected to fly at the companyâs upcoming annual general meeting.
Hereâs the storm forecast from the ONGC boardroom. As the single largest shareholder in the company, the petroleum ministry is threatening to move a resolution at the meeting, pressing for the nomination of the director general of hydrocarbons (DGH) to the company board.
In the opposite corner, ONGC chairman Subir Raha too is believed to have threatened to move a counter-resolution at the same meeting, seeking to resign if the government presses ahead with its threat.
The ministry has been seeking the views of the law ministry, as well as the Department of Public Enterprises, and is expected to finally send its notice to the ONGC company secretary seeking inclusion of the appointment in the AGM agenda by the middle of this month.
India Incâs highest profit-making company suddenly finds itself in the crossfire between its largest shareholder â the government, represented by the oil and gas ministry â and its chief executive.
Predictably, the rest of the board has remained a mute witness. It will be interesting to watch how the markets react to this entirely unpleasant development, having initially ignored reports of the festering acrimony in this blue-chip.
The ONGC top management is resisting the governmentâs board nominee on grounds of conflict of interest. A regulator cannot be on the board of a company, they contend. The DGH is currently doubling up as the regulator for the upstream sector.
The ONGC AGM is slated to be held in end-September. ONGC chairman Subir Raha and petroleum minister Mani Shankar Aiyar have exchanged extensive correspondence over the issue so far, including locking horns publicly in a recent board meeting.
What provides an interesting twist to this unseemly spat is the presence of a second nominee director proposed by the petroleum ministry â special secretary in the ministry, MS Srinivasan. However, at the moment, it seems Mr Raha is opposed only to the inclusion of the DGH.
This indecorous sparring match will also bring to the forefront the larger issue of autonomy for navratna PSUs, to which the current government stands committed. The petroleum ministry has pressed for the nomination of the DGH to the ONGC board as it feels that the regulator could play a vital role in strategic issues in the energy sector.
However, the company maintains that while it is for the government to decide who it wants to nominate as its nominee representative on the board, by virtue of being the largest shareholder, the nomination of the regulator was not found acceptable by the companyâs top management.
âThe regulator, after all, has to remain independent and being on a company board could lead to conflict of interest,â a senior ONGC official said. For instance, the DGH has to take calls on bids submitted from time to time on exploration blocks. âBeing a board member of one of the exploration companies, like ONGC, may not go down well with other players,â an official said.
This move to nominate the DGH to the ONGC board comes at a time when the government is yet to take a decision on the selection of independent directors.
Other issues in regard to the autonomy of PSUs have also been thrown up in the recent past. The government has been trying to pass off its officials as independent directors. Sebi has thwarted such moves citing that this would not pass the test on new corporate governance norms.
âHow can government officials give an independent view in board meeting,â Sebi has argued. The norms set by the Department of Public Enterprises (DPE) allow two government nominees on PSU boards.
But the petroleum ministry is seeking to put more government nominees on the board as it feels that the government needs to have greater say in the oil sector, especially given that petro-pricing is still such a politically-sensitive issue.
Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->
NEW DELHI: The simmering tension between petro minister Mani Shankar Aiyar and public sector ONGC chairman Subir Raha is fast approaching a flashpoint. A confrontation is in the works and fireworks are expected to fly at the companyâs upcoming annual general meeting.
Hereâs the storm forecast from the ONGC boardroom. As the single largest shareholder in the company, the petroleum ministry is threatening to move a resolution at the meeting, pressing for the nomination of the director general of hydrocarbons (DGH) to the company board.
In the opposite corner, ONGC chairman Subir Raha too is believed to have threatened to move a counter-resolution at the same meeting, seeking to resign if the government presses ahead with its threat.
The ministry has been seeking the views of the law ministry, as well as the Department of Public Enterprises, and is expected to finally send its notice to the ONGC company secretary seeking inclusion of the appointment in the AGM agenda by the middle of this month.
India Incâs highest profit-making company suddenly finds itself in the crossfire between its largest shareholder â the government, represented by the oil and gas ministry â and its chief executive.
Predictably, the rest of the board has remained a mute witness. It will be interesting to watch how the markets react to this entirely unpleasant development, having initially ignored reports of the festering acrimony in this blue-chip.
The ONGC top management is resisting the governmentâs board nominee on grounds of conflict of interest. A regulator cannot be on the board of a company, they contend. The DGH is currently doubling up as the regulator for the upstream sector.
The ONGC AGM is slated to be held in end-September. ONGC chairman Subir Raha and petroleum minister Mani Shankar Aiyar have exchanged extensive correspondence over the issue so far, including locking horns publicly in a recent board meeting.
What provides an interesting twist to this unseemly spat is the presence of a second nominee director proposed by the petroleum ministry â special secretary in the ministry, MS Srinivasan. However, at the moment, it seems Mr Raha is opposed only to the inclusion of the DGH.
This indecorous sparring match will also bring to the forefront the larger issue of autonomy for navratna PSUs, to which the current government stands committed. The petroleum ministry has pressed for the nomination of the DGH to the ONGC board as it feels that the regulator could play a vital role in strategic issues in the energy sector.
However, the company maintains that while it is for the government to decide who it wants to nominate as its nominee representative on the board, by virtue of being the largest shareholder, the nomination of the regulator was not found acceptable by the companyâs top management.
âThe regulator, after all, has to remain independent and being on a company board could lead to conflict of interest,â a senior ONGC official said. For instance, the DGH has to take calls on bids submitted from time to time on exploration blocks. âBeing a board member of one of the exploration companies, like ONGC, may not go down well with other players,â an official said.
This move to nominate the DGH to the ONGC board comes at a time when the government is yet to take a decision on the selection of independent directors.
Other issues in regard to the autonomy of PSUs have also been thrown up in the recent past. The government has been trying to pass off its officials as independent directors. Sebi has thwarted such moves citing that this would not pass the test on new corporate governance norms.
âHow can government officials give an independent view in board meeting,â Sebi has argued. The norms set by the Department of Public Enterprises (DPE) allow two government nominees on PSU boards.
But the petroleum ministry is seeking to put more government nominees on the board as it feels that the government needs to have greater say in the oil sector, especially given that petro-pricing is still such a politically-sensitive issue.
Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->