Aiming to compete more effectively with the world’s leading energy groups, the government will create giant company Petro India Corporation (PIC) to merge state-controlled oil and gas companies under it.
Sources informed Newsd that the government will create PIC in stipulated time of 24 months and followed by restructuring of all existing PSUs under separate Strategic Business Units (SBUs).
PIC will control all the upstream and downstream operations of PSU Indian oil and gas sector, sources said adding, “Government stakes of all PSU oil companies will be transferred to the PIC.”
Sources informed that the PIC will be responsible for long term strategy, international trade, business development and monitoring the performance of various SBUs.
“The company’s board will also include heads of all SBUs so PIC can govern all the various restructured SBUs, which will function independently as profit centers independently,” sources said adding “PIC will also have several board level sub committees to monitor performance of various SBUs.”
Interestingly, SBUs will be responsible for the targets assigned by the Government and the holding company.
They informed that the restructuring of all existing PSU oil companies will based on the principle of similar expertise to be clubbed together.
Some of these SBUs are Exploration and production, Gas import, transportation and marketing, Refining, Marketing Operations and Distribution.
The sub-SUBs are Retail and LPG, Industrial products, Research and Development, Petrochemicals.
India has about a dozen state-run oil and gas companies – including Indian Oil Corp, Oil and Natural Gas Corp, Hindustan Petroleum Corp. But alone they do not have the financial power to rival global oil majors in bids for overseas oil assets.
“We propose to create an integrated public sector oil major which will be able to match the performance of international and domestic private sector oil and gas companies,” Jaitley said in his budget speech.
“Combining them will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for shareholders,” Jaitley said.
Heads of ONGC, HPCL and IOC have already welcomed this move. Oil industry executives welcomed the plan.
“A much bigger entity will give us bigger negotiating power in almost all activities globally such as the purchase of crude, technology, R&D (research and development) expertise…and faster decision making,” said D K Sarraf, chairman of ONGC told Firstpost.
