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.
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