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Press Release [FREE Access]
Petro Intelligence » LNG Stations: PLL’s Robust Initiative

By R. Sasankan

Petronet LNG Ltd has a unique character: it is a private company promoted by four state-owned oil and gas companies who together hold a 50 per cent stake. It is also the only entity in the petroleum sector that can showcase the country’s petroleum secretary as its ex-officio chairman. PLL was the brainchild of Dr Vijay Kelkar, former secretary in the ministry of petroleum and natural gas. Dr Kelkar – a bureaucrat of great renown who would later go on to become finance secretary and eventually chairman of the 13th Finance Commission -- had wanted to create an institution that would meld the virtues of the public and private sectors: it would have the solidity of a public sector through its four PSU progenitors and yet operate with the speed of a private sector company without being trammelled by bureaucratic red-tapism.

The freedom to think out of the box and implement decisions at speed was supposed to be the singular trait that would set it apart from any other entity in the petroleum sector. Sadly, things have not panned out that way. The Rs 350 billion outfit has found itself hemmed in by its overbearing parents who have scuttled any attempt to widen the core of its business – which is to import liquefied natural gas.

It isn’t as if PLL executives have not conceived ideas to broaden the horizon of PLL. But they have been stymied at every instance by the oil and gas monoliths that own its stock while zealously trying to protect their turf. The promoters have ensured that PLL does not extend its activities beyond re-gasifying the imported LNG.

PLL has lobbied for the right to market the LNG it imports but has never succeeded it trying to circumvent the roadblocks to its ambitions. LNG continues to be marketed by three of its promoter companies: Indian Oil Corporation (IOC), Gas Authority of India Ltd (GAIL) and Bharat Petroleum Corporation (BPCL). The fourth promoter – Oil and Natural Gas Corporation (ONGC) – has also meddled in its operations by securing the right to strip out the lucrative petrochemical components from the rich gas that it imports.

When PLL wanted to partner IOC in its 5 million tonne per annum LNG regasification terminal at Ennore in Tamil Nadu – and touted the fact that it was the only experienced LNG company in the country to burnish its argument for such a role – it was rudely snubbed.

PLL is making another pitch to break out of its narrow remit. This time Prabhat Singh, the CEO of PLL, has promoted the idea of establishing LNG stations along the national highways in order to feed long distance transport vehicles such as trucks and buses as the Modi government tries to wind down restrictions on movement of goods across the country. The downstream regulator has been convinced by PLL’s argument and has said that anyone willing to enter the space will be permitted to set up these LNG stations.

PLL has drawn up a plan to set up around 1,000 LNG stations in phases in alliance with other oil companies. But the four promoter companies are looking to scupper PLL’s initiative once again. It will all boil down to who carries enough political clout to weigh in on the decision. Prabhat Singh is no political light weight, hailing as he does from Uttar Pradesh. Will he be able to swing the verdict his way?

This is a tough question to answer. A lot will depend on Singh’s personal equation with petroleum minister Dharmendra Pradhan. The ministry has a new secretary and it is hard to say which way he will lean. The petroleum monoliths – parents of PLL – have a lot more influence in the ministry than Prabhat Singh does. But that by itself may not be enough to torpedo PLL’s plans. The real pity is that manipulative politics and internal bickering could dampen the future of a project that, if implemented, will ratchet up gas consumption in the country.

PLL has been plagued by the machinations of such influence peddlers. Dr Kelkar had a very noble objective in mind when he conceived the idea of PLL which was incorporated in April 1998: he wanted to ensure that would not be dogged by delays and straitjacketed by the quixotic regulations that public sector units must comply with at all times.

Dr Kelkar was able to push through his idea for the establishment of PLL but then he was shifted out of the ministry. His successor – Prabir Sengupta – tried to undermine Dr Kelkar’s dream child by deliberately messing with the selection process for PLL’s first chief executive.

Dr Kelkar had christened the company and drew up its basic charter. He wanted K.K. Kapoor, the superannuating chief executive of Gas Authority of India Ltd (GAIL), to head the new company since he had utmost faith in Kapoor’s honesty and financial prudence – traits that he had eminently shown when he managed GAIL.

Sengupta, however, wanted his own man to head PLL – a worthy who incidentally had not even applied for the position and, therefore, was not even on the shortlist drawn up by the government-appointed selection panel. Sengupta was able to persuade the selection panel to name Suresh Mathur, director (finance) of Indian Oil Corporation as its preferred candidate for the position.

Mathur did not know much about gas, but was familiar with international trade of crude and petroleum products as he had handled the trade division of IOC. He was appointed Chairman and Managing Director (CMD) of Petronet LNG Ltd, a post equivalent to chief executive of any Indian PSU.

The gas veteran on the board of PLL was R.P. Sharma, who has been with GAIL since inception. Sharma believed that he was the Bishmacharya of the gas industry and, therefore, deserved a greater say in the affairs of PLL. Mathur was able to keep him at a distance which annoyed Sharma who used his own lobbying skills to cut Mathur down to size. Though the petroleum secretary has no direct role in PLL’s scheme of things, Sharma ensured that the petroleum secretary became the ex-officio chairman who would preside over all the board meetings. Mathur’s post of CMD was downgraded to MD and CEO. Sharma then left and joined Reliance Industries Ltd in Delhi.

But Mathur was canny enough to turn what was a setback to his advantage: it drew him and his successor, P. Dasgupta, closer to the secretary. With the petroleum secretary installed as PLL chairman, there were no dissenting voices at the board meetings. The upshot of this was that Mathur and his successor were able to establish extremely close relations with the management of RasGas with which PLL signed a long-term contract for the supply of 7.5 million tonnes of LNG per annum. When there were violations of certain vital provisions in the contract, there was no protest from the PLL management.

PLL’s Dahej terminal has been operating at full capacity since inception but its Kochi terminal has virtually gone to rust over the past decade. Of late, its capacity utilisation has gone up to 16 per cent and there is some hope now that it might fare better once the Kochi-Mangalore pipeline is commissioned.

PLL’s future now hinges crucially on whether it is permitted to enter the arena of LNG stations. The current PLL leadership is desperate to make an impact in an area of its expertise. The government must seize on its enthusiasm to finally make a mark – and slay the ghoul that has impeded its progress so far.



To download the latest issue 'Volume 27 Issue 7 - July 25, 2020', click here
Petro Intelligence [FREE Access]
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LNG Stations: PLL’s Robust Initiative
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A Cry For Change Amid Historical Blunders
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