Oil and gas PSUs, regulator face uncertainty over top appointments

Regulator PNGRB itself has not had a chairman since December 2020, when incumbent Dinesh K Sarraf completed his tenure. Making things worse, the board of the regulator, which includes four members besides the chairman, was almost dysfunctional as three positions were vacant. Anjani Kumar Tiwari eventually joined as the second member on the board on December 1, 2021 but the other two positions are still vacant.

The Ministry of Petroleum and Natural Gas (MOPNG) itself did not have a full-time secretary for a month last year after incumbent Tarun Kapoor superannuated in November 2021. Ministry of Mines Secretary Alok Tandon was given the additional responsibility of MOPNG secretary. Pankaj Jain, former additional secretary in the finance ministry, was appointed as the ministry secretary only at the end of December.

“Some companies and organisations are of strategic importance to the nation and stability is key for business operations. Investors, too, want stability. There could be, in rare instances, a genuine problem filling positions; but as a good practice, that is not preferable,” said Anil Razdan, former secretary to the power ministry and additional special secretary with the MOPNG.

Stop-gap arrangements

Privatisation bound-Bharat Petroleum Corporation of India (BPCL) also made interim arrangements after Chairman and Managing Director D Rajkumar retired on August 31, 2020, giving additional charge to K Padmakar, Director (HR). It was believed that the government may have been inclined to allow BPCL to announce the new management after privatisation is completed.

Arun Kumar Singh, who was earlier director of marketing, was appointed as the CMD only in May 2021; he is scheduled to retire in October. “After a delay of one year, they appointed a CMD for a year; it feels like a stop-gap arrangement. Three director positions are also vacant. What signal does it send to employees and investors,” a senior sector expert wondered.

BPCL currently does not have a director on the board for three functions: marketing, HR and refinery operations. Government headhunter Public Enterprises Selection Board (PESB) picked Sanjay Khanna, an executive director at the company’s Kochi refinery, for the post of director-refineries at BPCL, but his official appointment is still awaited.

In ONGC’s case, too, former CMD Shashi Shanker retired on March 31, 2021. While typically, the government selects a future CMD at least a few months before the retirement of the incumbent, in this case, the then senior-most director Subhash Kumar was given additional charge but he, too, retired at the end of December, leading to Mittal’s appointment.

PESB had received ten applications for the position but after interviews in May-June 2021, the headhunter announced that it was unable to find a suitable candidate and recommended a search committee.

“Why should the leadership of this organisation be restricted to PSU officials and bureaucrats? The government can bring in talent through international talent hunters and get a professional who can give the company stability and growth. Remuneration can be linked to performance targets. Perhaps issues like these are reflected in the inexpensive valuation of ONGC, which is India's premier exploration and production company,” said Harshvardhan Dole, Vice President, IIFL.

A detailed query sent to the Petroleum Ministry over the delays in appointments remains unanswered.

Speed bumps

Typically, each ministry informs the PESB much in advance about upcoming vacancies. The PESB then issues the vacancy, invites applications, shortlists candidates, interviews them and then announces the selection. Only when the Appointments Committee of Cabinet (ACC) approves the selected candidate is the appointment final.

There has been criticism that the long-winding process of top appointments causes delays, but vacancies piled up last year as PESB itself was headless from September 2020 to April 2021 as its Chairman Rajiv Kumar was transferred to the Election Commission of India (ECI) on September 1, 2020.

Interestingly, his replacement, Mallika Srinivasan, was previously the CMD of Tractors and Farm Equipment (TAFE) Limited, marking a rare appointment from the private sector for the government body, which traditionally has been headed by a former bureaucrat. Could this be a sign that the government won’t shy away from hiring top bosses from the private sector?

“It’s not easy to hire a top executive from the private sector; there still is a huge gap in remuneration. There is also the issue of cultural mismatch; the executive may not be able to adapt and the senior management may also have issues accepting an outsider,” Razdan said from his experience.

For the sake of comparison-- according to ONGC’s Annual Report, former chief Shashi Shanker drew a total compensation of Rs 1.39 crore in FY21. In the same year, PMS Prasad, Director of Reliance Industries, who heads the group’s energy business, received Rs 11.65 crore as salary and allowances.

There are also flip-flops in decision making.

In June 2021, former power Secretary Sanjeev Nandan Sahai was selected as the new chairman of oil regulator PNGRB but the government did not approve his appointment and the position was advertised again.

“The government should review why it is not able to get suitable candidates at once for organisations of ONGC’s or PNGRB’s calibre. If the same process is repeated, it will yield the same result. If, after interviewing nine senior people for ONGC they couldn’t find a CMD, they need to cast the net wider. But whatever they do, there is no justification for delays in appointments in companies we proudly call maharatnas,” a former top oil and executive from a PSU said.