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Press Release [FREE Access]
Petro Intelligence » ONGC: More Sinned Against….

by R. Sasankan

Dharmendra pradhanWhen King Lear stands on a heath and rants against his terrible fate, he roars: “Tremble, thou wretch that hast within thee undivulged crimes, unwhipp’d of justice”, before going on to lament how he has been “more sinned against than sinning”. You can often rip lines from Shakespeare’s tragic heroes and use them to describe more mundane events without running the risk of descending into bathos. So, today, I am tempted to talk about the litany of “undivulged crimes” that have cast a long shadow over the inner machinations of the Oil and Natural Gas Corporation (ONGC).

Permit me, therefore, to begin this piece by recalling an incident that I had spoken about not so long ago in one of my columns. It is hard to be precise about the date but I reckon it must have occurred close to seven years ago. The Public Enterprises Selection Board (PESB), the government’s body for selecting senior executives of Public Sector Undertakings (PSUs), was getting ready to hold interviews for the post of Chairman and Managing Director (CMD) for the top three oil companies: ONGC, IOC and BPCL. The interviews were scheduled to be completed within a period of one month.

Back in those days, this column used to weigh the winning prospects of various candidates. We never lobbied for anybody but were eager to predict the outcome. It is a risky job professionally but we always got it right. We stuck our neck out and made our prediction– and, for good measure, carried the pictures of the candidates who we thought would be propelled into the hot seats. The question is: how did we do that? The secretary from the ministry of petroleum and natural gas attends the interview and conveys the ministry’s preference. We had a fair idea about the secret yardstick that the then petroleum minister was going to use– and we just measured the chances of each candidate on the basis of that yardstick.

Shashi ShankerI have recalled this incident at a time when the ONGC executives are agitating against the government move to hand over 15 producing fields of ONGC and Oil India to private parties including foreign companies. And the sentence that immediately popped into my mind was King Lear’s expression of his impotent rage against the quiddities of life: “I am a man more sinn’d against than sinning.” Change the circumstances– transform a personality into an entity and you might well hear the lament of India’s premier oil company.

I have been covering ONGC intensely as it was basically based in New Delhi though its headquarters is supposed to be in Dehra Dun. Oil India was geographically far away and its activities were mostly confined to the states of Assam and Arunachal Pradesh. If I ever get to write a book and piece together my memories of events and people, I dare say that it would be titled: The Rape of ONGC. Strong words? Definitely, but no other title can sum up the history of this hapless company.

May I now recall for the readers another interesting incident that relates to the downstream giant, Indian Oil Corporation (IOC)? The PESB had selected an executive director of IOC for the post of director. There is normally a space of two to three months between the recommendation and issuance of the appointment letter. This is an agonising period for the selected candidate. Our IOC friend suddenly decided to visit Chottanikara temple in Kochi. I was intrigued. Why Kochi when there are quite a few other well-known temples in the country? Cochin Refinery Ltd was generous enough to provide him with a car to move around the city. I alerted a friend in CRL about the impending visit. It finally turned out that the main purpose of the visit was not to seek the blessings of the Goddess of Chottanikara Temple but to call on a Gulf-based Malayalee businessman who is closely connected with the petroleum trade. The mission was to raise additional resources for the political boss without which the appointment would not go through. Our friend was so resourceful that he climbed further to become the CMD of the company with the blessings of the same political boss. This does not mean that competent people are not elevated to top posts in oil and gas PSUs. They do make it to the top but some corporate has to arrange for the mandatory lump sum payment that has to be made to the party in power. They do not have to make the payoff themselves. The corporate agents will do the job and will then have to be compensated through the award of contracts. It is a terrible cash-for-favours system that has been in operation since the 1980s.

Utpal BoraIn the 1980s, the PESB recommended a south Indian executive of ONGC for the post of finance director. Back in those days, ONGC which was a Commission had the post of member instead of director. Immediately after he was recommended, the CBI raided his office and residence and claimed to have recovered incriminating documents. The CBI kept quiet for the next two months to enable the person who was ranked second on the panel’s shortlist was appointed. Within a couple of weeks after the announcement was made, the CBI cleared the name of the “raided” candidate. He left ONGC and took up an assignment with a private company in Bombay. Remember this happened not in some sub-Saharan African country but in the bluest of the bluechip PSUs in the world’s largest democracy.

I do not want to bore readers by reeling off more stories. Look at the performance of ONGC in the first 20 years of its existence. Its performance in discovering hydrocarbon compares with the best in the world. But once Bombay High was discovered, the situation dramatically changed. Greedy politicians colluded with the corrupt officials within ONGC. All the ruling parties-- the Congress, the National Front, NDA or UPA-- were party to the loot of ONGC. Wrong people were placed in high places. Even the PESB is a party to the rape of ONGC. How could PESB agree to make a driller without even a day’s experience in production as member in charge of production? Hydrocarbon production is a highly specialised area. This is precisely why ONGC fields face production problems.

In the 1980s and 90s, ONGC enjoyed the distinction of owning the largest fleet of rigs among all upstream oil companies in the world. Normally, E&P companies, on the basis of seismic survey, identify prospective areas and hire drilling rigs. Like any other major business order in E&P, Purchase of rigs too carries an attractive kickback which almost totally goes to the political leadership. Saddled with such a large fleet of rigs, ONGC had to keep drilling without bothering too much about the prospectivity of the location. This, in turn, got ONGC the distinction of drilling the largest number of dry holes among E&P majors.

Dharmendra Pradhan inherited an ONGC which was malevolently twisted out of shape. ONGC still survives and can legitimately claim to have a large talent pool. Even competent and honest chief executives and directors could not resist directives from the political bosses to funnel kickbacks. It would be uncharitable to blame ONGC-ians for their perceived lack of competence in maximising crude production. The present government plans to hand over 15 fields to private parties. I appreciate Pradhan’s intention to raise domestic production to meet Prime Minister’s objective of reducing fuel imports. As I pointed out in a previous column, it was a production expert of ONGC who offered to double Bombay High’s production at a negligible additional cost. No other production expert in the world could have achieved such a feat. It was the political leadership that shied away from the offer because the cost of his project was negligible.

Crude production should go up but the remedy prescribed by Pradhan looks worse than the disease. First of all, he should not have depended on the DGH which, in my view, is not competent to decide on such matters. Its colossal blunder in assessing the reserves of DI D3 fields of KG D6 and the subsequent failure to detect gas migration from ONGC fields in KG block to adjacent RIL block remain fresh in memory. The country’s petroleum industry would not have forgotten the choicest epithets used by the ONGC management under D.K. Sarraf to blast the DGH leadership before the Shah Committee.

I acknowledge that there are corrupt elements within ONGC. These people thrived on political patronage. If professionalism is restored, and political interference is minimised, ONGC can still be restored to its pristine glory. ONGC and Oil India have got the right leadership and they need to be supported by the political leadership.



To download the latest issue 'Volume 25 Issue 19 - January 10, 2019', click here
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