Performance is a side show

Normally, you'd expect so-me serious soul-searching when the country's oilproduction continues to fall short of target, by around 10 milli...

Normally, you8217;d expect so-me serious soul-searching when the country8217;s oilproduction continues to fall short of target, by around 10 million tonnes inthe eighth plan period and by a similar amount in the current plan. You8217;dalso expect some blood-letting when, after over two years of exploring foroil in the deep seas, ONGC came up with absolutely nothing, except a bill ofRs 250 crore.

And it wouldn8217;t be asking for too much, would it, to expect that someone bepenalised for the fact that, because of bickering between variousministries, it took the government over two years to finalise just the termsof their new exploration policy. How vital a new exploration policy is canbe judged from the fact that the country is bleeding white just paying foroil imports at around 12.5 billion, this year8217;s oil import bill is almostdouble that of last year8217;s. Around a third of our export earnings are usedup just paying for our oil imports, and the way things are going, this couldwell go up to 40 per cent in just the next few years.

Needless to say, however, no one8217;s overly concerned about the appallingcondition of the country8217;s oil sector. Last year, in December, the thennew secretary petroleum, S. Narayan, set up a review committee headed byA.R. Sihag the director in charge of exploration, and asked for a reportin three weeks on why ONGC8217;s oil production was constantly falling, and whythey had not been able to repair the oil fields in Bombay High and theNeelam fields. It8217;s been three months since, but no-thing8217;s happened. EitherSihag has not submitted his report, or the secretary8217;s been too preoccupiedto take any action.

So when ONGC8217;s production continues to fall, from 31.6 million tonnes in1995-96 to 26.5 this year, and to an estimated 24.4 next year, no one hasbeen held responsible for this the operations team blames the reservoirteam, and vice versa, for the failure to judge how the oilfields wouldbehave, and consequently for the fact that they could not be repaired allthese years.

No one has thought it worthwhile to call for an explanation from ONGC or thedirector-general of hydrocarbons as to what kind of study was done on oilpotential it8217;s been two years since the promise was held out that hugefinds would be made in the deep seas, but every well that ONGC has drilledhas been dry for all practical purposes. And who8217;s to blame for the factthat fields which have been handed over to the private sector, such as theTapti gas one, have a lot more reserves than ever anticipated by ONGC whenit controlled these very fields?

Why is no action being taken? Simple: the bureaucrats who control thecountry8217;s destiny are too busy playing politics to look after, or ensure,performance from the companies who report to them. As this paper reportedlast August, for instance, the entire top brass of the country8217;s topoil-producing firm, ONGC, including its chief B.C. Bora, was eitherunconfirmed or on temporary extension at that time.

What happens because of this is also simple. Many of the top brass thenspend all their time running around Shastri Bhawan, trying their best toplease the bureaucrats that matter, sending cars for their use, paying theircellphone bills, and figuring out other ways to endear themselves. And aslong as they keep doing this, the bureaucrats in question don8217;t bother toask ONGC why it8217;s missing its targets. By the way, this applies to allPSUs, not just ONGC. It is being singled out only because it is the largestoil producer, and so the most important.

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The game of keep-them-guessing, of course, continues to be played with gayabandon. ONGC8217;s director operations, A.S. Soni, retires in July, but thereappears to be no great hurry to find a successor. Since interviews for thepost have not even been held so far, it8217;s quite likely that none will be inplace when Soni demits office. And now, according to the grapevine at ONGC,there is a move to abolish the post altogether, and amalgamate it in ato-be-created vice-chairman8217;s job!

Normally, one would blithely recommend privatisation as a solution to thecurrent mess you get rid of bureaucratic interference and the privateowner then takes care of performance issues. But apart from the massivepolitical furore that selling off an organisation as large as ONGC wouldresult in, the fact is that valuing ONGC8217;s assets, and the amount of oilreserves in each field, is such a gigantic and complicated task, that it8217;sbest left for the time being.

But considering that, at today8217;s prices, every million tonne shortfall inproduction leads to a Rs 850 crore additional oil import bill, clearly it8217;stime for the oil ministry to get its act together, to ensure that ONGC isallowed to function autonomously, and that it is taken to task for itsfailures. Will Petroleum Minister Ram Naik please wake up?