With the petroleum ministry declining to extend the tenure of ONGC chief Subir Raha, a significant phase in the PSU’s history comes to a close. There are indications that Raha did not get an extension on account of negative assessments by former petroleum minister, Mani Shankar Aiyar. Be that as it may, it was on Raha’s watch that ONGC attempted to secure its autonomy as well as professionalise its working. His successor will have to be mindful of honouring this direction.Raha’s term was marked by an improvement in the performance of ONGC and its rise to the group of India’s top companies. ONGC’s profit after tax rose from Rs 3,477 crore in 2000 — before Raha became CEO in May 2001 — to Rs 12,777 crore in 2005. ONGC’s market cap rose from Rs 20,000 crore in May 2001 to Rs 1666,083 crore today. His fight for greater autonomy for ONGC was not appreciated by the petroleum ministry. He had protested against the ministry’s decision to appoint two additional government’s nominees to the firm’s board. 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. On another occasion, the petroleum ministry chose to make ONGC pay for losses of other PSU companies in the name of “subsidy-sharing”. Raha’s objections to such arrangements were ignored.The UPA has made noble announcements about greater autonomy for public sector units. It took some limited steps in accepting some of the recommendations of the Report on Empowerment of Central Public Sector Enterprises. What it needs to do is to give PSU managements true autonomy — including in decisions concerning labour, managerial, pricing and investment issues. The expert group recommended that Central PSUs have independent boards and that ministries should not interfere with the functioning of the PSUs under them. The controversy over Subir Raha’s extension should serve as a reminder to the government that it needs to urgently address this issue.
