Raha: Testing times

New Delhi, April 22: In a move widely seen as an attempt to clip ONGC chairman Subir Raha?s wings, the petroleum ministry has issued instructions to put on hold all major decisions in Mangalore Refineries and Petrochemicals Ltd (MRPL) until the new managing director takes over.

The department of public sector enterprises has initiated the process to appoint a managing director and finance director for the firm.

Joint secretary Sanjoy Joshi, who looks after the upstream sector, and V. P. Joy of the petroleum ministry, have been appointed new government nominees on the MRPL board.

The appointment of a managing director and new directors on the board is likely to reduce Raha?s control on the day-to-day management of the company, although he will still remain the chairman as MRPL is an ONGC subsidiary.

Raha has been running the company with a team of vice-presidents. He is an old Indian Oil hand and has used his hands-on experience in downstream business to turn around MRPL. However, the ministry is of the view that the ONGC management should concentrate on its area of core competence, which relates to oil exploration and production.

The country?s crude oil output has been stagnating at around 33 million tonnes. Given the rising demand and sharp rise in international prices, this has led to an increased dependence on imports over the years.

While ONGC-Videsh has made profitable overseas acquisitions in the Russian offshore Sakhalin oilfield and the Greater Nile project in Sudan, a major oil find within the country has been eluding ONGC despite heavy investments in the deep-sea oil hunt.

The government has converted MRPL into an autonomous ?schedule B? public sector company.

The new directors will be selected according to the normal procedure followed by the Public Enterprises Selection Board. Following this, the appointments committee of the cabinet will give its seal of approval.

Revised earnings

ONGC today revised downwards its revenue estimates for 2004-05 to Rs 46,025 crore and net profit to Rs 12,175 crore as the ministry instructed it to share the under-recoveries on kerosene and LPG for the fourth quarter of last year. It had earlier estimated a net profit of Rs 12,725 crore and a turnover of Rs 47,025 crore.