The Hindu Business Line : `Structural changes needed to correct oil PSU distortions'

THE Chairman of the Advisory Committee on Synergy in Energy, Mr V. Krishnamurthy, feels that certain structural changes are required to correct the distortions that have cropped up in the structure of oil PSUs.

"Historically, oil PSUs have been functioning reasonably efficiently. But certain distortions have come up. Structural changes are required," Mr Krishnamurthy told reporters after the first meeting of the advisory committee here on Monday.

The Committee, which began its deliberations on Monday, was presented with nine options by the Union Minister of Petroleum & Natural Gas, Mr Mani Shankar Aiyar, on restructuring of oil PSUs to strengthen them in line with the announcement made in the National Common Minimum Programme (NCMP).

The options include merging oil PSUs into a single entity or a couple of entities on the basis of certain criteria, setting up holding companies, resorting to a management structure like that of Shell, adopting the Petrobras model or following the example of China which has divided oil firms into two large groups with many subsidiaries under them, Mr Aiyar said.

"The Committee will examine all the options in greater detail and arrive at a conclusion which would be presented to the Government for further consideration," Mr Krishnamurthy said.

Though the Government has given a timeframe of two months for the panel to finalise and submit its report, Mr Krishnamurthy said the Committee will require a " little longer" to complete its job. On his part, Mr Aiyar said the Government had no reservation in extending the period of the Committee nor on limiting the number of options that could be considered by it.

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