Budget 2017 - The government will create a mega oil company as part of its plan to consolidate public sector companies. The proposal of merging 13 government oil companies, which had stemmed out of the Cabinet Secretariat last year but did not find takers in the ministry of petroleum, is now back on the agenda.
“We see opportunities to strengthen our central public sector undertakings through consolidation, mergers and acquisitions... Possibilities of such restructuring are visible in the oil and gas sector. 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,” said Finance Minister Arun Jaitley in his Budget speech.
He said that the CPSEs could be integrated across the value chain of an industry, which would give them “capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders”. But, for reasons ranging from the managerial to employee management and legal, any attempt to execute the idea could see a long-drawn process involving legislative changes as well. Even an indomitable Mani Shankar Aiyar had to beat a retreat on this proposal, ostensibly on the recommendations of V Krishanamurthy’s Synergy in Energy panel in 2005.(Read More)
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