Subir Raha, chairman of the Oil and Natural Gas Corporation, has protested against the petroleum ministry’s decision to appoint two additional nominees of the government to the firm’s board. He must be commended on this bold step. The government has been treating, and continues to treat, public sector enterprises as its fiefdom. The interests of the government and the popularity of the ruling party are sought to be served through a gross violation of corporate norms.The issue was the appointment of the director general of the directorate general of hydrocarbons (DGH), as a member of the ONGC board. One of the jobs of the DGH is regulation of oil production and exploration business on behalf of the government. The DGH chairs all management committees of joint ventures in which ONGC is a partner. Thus all proposals by ONGC are judged by the DGH on behalf of the petroleum ministry. Appointing the DGH additional secretary to the board would have further strengthened the ministry’s hands in the decisions made by the ONGC. Good corporate governance requires that ONGC be accountable to all its shareholders, and not merely the government. The government is the majority shareholder but 26 per cent of shares are held by the public. The government cannot behave as if it owns the company. On an earlier occasion, it has chosen to make ONGC pay for losses of other PSU companies in the name of ‘subsidy-sharing’. Such behaviour will undermine the navratnas, not strengthen them.This raises another question: that of the role of the regulator and its autonomy. The government has already tried to undermine the role of the electricity regulator through the Electricity Act. Regulation in the telecom sector has been embroiled in difficulties. In cases where there exist public sector enterprises that are being regulated, sometimes the government puts pressure on the regulator to push through policies in violation of the regulator’s independent role. This weakens both the regulator and the companies operating in the sector.
