Recast of oil PSUs to get fresh look

Petroleum Minister Mani Shankar Aiyar has announced constitution of yet another committee to take a re-look at the issue of integration of o...

Petroleum Minister Mani Shankar Aiyar has announced constitution of yet another committee to take a re-look at the issue of integration of oil PSUs.

This comes close on the heels of the report of synergy in energy committee, headed by Dr V. Krishnamurthy, which opposed mergers of blue chip companies for creating an oil behemoth.

Aiyar informed the Parliamentary Consultative Committee on Thursday that Prime Minister Manmohan Singh had cleared setting up of a standing advisory committee for integrating/restructuring of oil PSUs.

However, the minister did not elaborate on the mandate for the panel or as to when it would be constituted.

The report of the Krishnamurthy panel, which opined that mergers and consolidations occurred worldwide during times of low oil prices and were instruments of eliminating excess workforce and duplicate facilities, would be the starting point for the new committee.

With oil prices ruling at historic highs and reduction in manpower not feasible in the Indian context, mergers were ruled out by the committee.

The Krishnamurthy panel was also set up for suggesting a consolidation model for the oil sector. In order to cut the ongoing destructive competition amongst the oil PSUS, the committee was asked to suggest a model for merging oil companies into one or possibly two mega corporations.

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However, with the Krishnamurthy panel ruling out such a merger, the petroleum minister now wants to have the idea revisited, official sources said.