The talent pool in India’s state-owned petroleum sector is shrinking – and it is becoming harder to find stellar people who can fill the top slots at these companies.

The Public Enterprises Selection Board (PESB) does make an effort to comb the talent base – after all even general managers can apply for the post of chairman and managing director (CMD) – but invariably has to settle for a board-level director to fill the hot seat. The only exception to this well-worn practice was seen when Prashant Banerjee, who was then an executive director with Indian Oil Corporation (IOC), was elevated to the post of CMD of GAIL more than a decade ago. Banerjee was at that time one level below a director’s position. The appointment was made by the National Democratic Alliance government headed by Atal Behari Vajapyee. Banerjee had faced competition from several directors from other oil and gas PSUs but he made the final cut.

Three years ago, the PESB could not find a director-level candidate for the post of CMD at Indian Oil Corporation. A mandatory provision is embedded in the selection process that the PESB follows: the candidate must have a minimum two years of residuary service before he attains the age of superannuation, currently fixed at 60 years, while assuming the position. No one from within IOC met this requirement and so the choice inevitably fell on B. Ashok who was only an ED. Oil India had a director-level candidate for the post of CMD but politics crept in, delaying the selection by more than a year. Finally, an ED from ONGC was selected.

This fairly long preamble on head honcho appointments in India’s petroleum sector is necessary to explain the machinations that will play out once again when the battle begins for the top position at the country’s biggest public sector outfit in the next couple of months.

ONGC’s boss D.K. Sarraf is superannuating on September 30 this year. ONGC has innumerable EDs but only one director is eligible to compete. N.K. Verma, director (exploration), the brain behind the unravelling of the gas migration scam, should normally have succeeded Sarraf. But he does not have the mandatory two-year period before he attains the age of superannuation. He stands a chance only if the government enhances the retirement age which does not seem to be on the agenda. ONGC also faces a shortage of talent. The only director in the reckoning is Shashi Shanker, director (T& FS).

ONGC’s present boss, D.K. Sarraf, has been something of a wonder. Not many thought he would make it to the top. He is unassuming and lacked the clout to lobby for the post. Insiders say then petroleum minister Veerappa Moily had recommended his name to the PESB for a devious reason. Moily wasn’t planning to appoint Sarraf to the post; he just wanted to buy some time till he could lobby for an extension for Sudhir Vasudeva, the CMD at that time. Moily believed that Sarraf, a light weight, would not be able to resist the move. However, Moily’s stratagem unravelled at the eleventh hour when the media got wind of the plan and raised a hue and cry.

Luck has always been on Sarraf’s side. He surprised the entire public sector industry when he took on the politically powerful Reliance Industries and went to the court seeking action against the oil and gas behemoth for sucking gas out from ONGC’s adjacent block.

Moily was furious with him. Had Moily returned as petroleum minister, Sarraf would not have been confirmed as CMD after the first year of his term. The CMDs of PSUs are on probation during the first year of service and have to be confirmed by the government if they wish to complete the tenure.

The next big test for Sarraf was the selection of MD and CEO of Petronet LNG Ltd (PLL). He was made the head of the selection committee as ONGC is one of the four public sector promoters of PLL. The then petroleum secretary, Saurabh Chandra, had a candidate in mind and Sarraf was asked to recommend him for the post. Normally, any CMD waiting to be confirmed as CMD on completion of one year in office, would not dare go against the wishes of the secretary. Sarraf outwitted the secretary and that is precisely why Prabhat Singh is now heading Petronet LNG.

But the most controversial decision – and which will perhaps haunt him for the rest of his life – was the manner in which he was inveigled into supporting the Modi government’s desire that ONGC bail Gujarat State Petroleum Corporation’s Deen Dayal gas asset out of a sticky situation. Sarraf had been wrangling over the move for more than one and a half years but eventually agreed to acquire the gas asset. The question that will always be asked is this: did Sarraf sacrifice ONGC’s interest by acquiring the Deen Dayal asset? Many have posed this question to him. Sarraf denies this and asserts that he went by a financial model that fully protects the interests of ONGC.

I would not like to comment on the merit of the decision in the absence of details. I haven’t seen his financial model either. But so far as my understanding of Sarraf goes, he is not the type who will crawl when asked to bend. He would not have compromised on basic principles. One must realise that in the Indian conditions, no PSU chief can refuse to bend. The pliability of a top official only depends on the flexibility of his spine.

The government will certainly monitor the selection process for the next CMD of ONGC. The selection need not necessarily be from within. Shashi Shanker is eminently qualified for the job. In drilling, an area in which he specialises, he can claim outstanding achievements. But the selection ultimately will depend on how the government perceives his credentials.

Oil India, the only other upstream PSU, is not in a position to offer candidates. It had provided one CMD in the past. The present CMD of Oil India is a former ONGC hand who cannot be expected to be considered as he is in the process of settling down in Oil India. The downstream sector has also offered a CMD in the past. It hasn’t been a one-way traffic: upstream executives have also occupied top slots in the downstream sector as well. But experience shows that these migrant birds do not normally fit in their new work environment. Subir Raha, a competent man, who came from IOC, was a fish out water in ONGC. By the time he came to grips with upstream issues, his tenure was over. R.S. Butola, who headed IOC, had gone from ONGC’s ranks but remained an outsider till the very end.