Citing procedures and antecedents, the Department of Public Enterprises (DPE) has thrown a spanner at Petroleum Minister Dharmendra Pradhan’s push to grant more autonomy to refining and marketing company Hindustan Petroleum (HPCL).
Through a letter dated February 12, the DPE has insisted that the Ministry of Petroleum & Natural Gas (MoPNG) should first obtain consent of HPCL’s holding company Oil and Natural Gas Corp (ONGC) before resubmitting a revised proposal on giving Maharatna status to HPCL.
“The views/approval of ONGC, holding company of HPCL, on the proposal for grant of Maharatna status to HPCL is not available in the proposal,” said the DPE Letter.
The Ministry, after obtaining Pradhan’s approval, had routed HPCL’s request for the status to the DPE on January 22 without consulting ONGC — which last year bought the government’s 51.11 per cent share in HPCL for Rs 36,915 crore. The DPE has also asked the Ministry to give reasons for providing the exalted status to HPCL considering that ONGC was already a Maharatna company.
“There is no previous instance of grant of Maharatna status to a subsidiary Central public sector enterprise. The Ministry is requested to furnish the reasons for proposing grant of Maharatna status to HPCL, now a subsidiary of ONGC which is itself a Maharatna company,” the letter said.
Moreover, the DPE advised that the revised proposal be based on HPCL’s performance for the fiscal 2018-19 rather than on the basis of fiscal 2017-18.
“Since more than 10 months of the current financial year 2018-19 are already over, it would be appropriate that the performance of HPCL for 2018-19 is taken into consideration while processing this proposal,” the DPE advised.
Despite DPE’s position, Pradhan continues to rally behind HPCL. He issued a directive more than a week later to Petroleum Secretary M M Kutty advising him to immediately provide all inputs to the DPE for speedy approval.
“… HPCL meets all the qualification criteria as defined for Maharatna status and there is nothing in the guidelines which prohibits grant of Maharatna status to them. MoPNG has already recommended the proposal to DPE after approval of the competent authority,” he wrote on February 22.
“I suggest that all the necessary clarifications be provided to DPE immediately, keeping in view the background, the matter may be actively pursued with DPE so that the process of grant of Maharatna to HPCL can be completed expeditiously,” he added.
ONGC and HPCL have been in a slugfest since the share acquisition, with the latter refusing to acknowledge ONGC as its promoter. HPCL continues to list ‘President of India’ as its promoter with ‘zero’ shareholding. ONGC is listed as ‘public shareholder’ owning ‘51.11 per cent’ share.
HPCL has repeatedly blocked ONGC’s attempts to assert its authority: ONGC chief cannot chair the HPCL board, as he does in other subsidiaries, or intervene in HPCL matters. The cold relations between the two has also pushed the HPCL-MRPL merger plan to the backburner.
A Maharatna tag will potentially curtail ONGC’s powers to take business decisions for
HPCL as the status bestows greater freedom from government control as well to incur capital expenditure on projects and purchases without any monetary ceiling.
It also provides significant autonomy to pump equity in joint ventures and float subsidiaries, raise debt, undertake mergers and acquisitions without seeking ONGC’s approval which has only one member on HPCL’s board of directors.