The Hindu Business Line : `Synergy in energy' panel may offer 2-3 options for oil PSUs' merger

THE Krishnamurthy Committee on synergy in energy, which is expected to submit its report on Monday to the Petroleum Minister, Mr Mani Shankar Aiyar, is likely to propose two or three options for the merger of oil public sector undertakings, instead of suggesting a monolith structure bringing all PSUs under one umbrella.

The committee had sought a month's extension for submitting its report so that it could synthesise the different views put before it.

The main concerns before the committee are how oil companies can increase focus on exploration and production and how to make oil firms more focussed on development and absorption of technology.

Considering the high volatility in the oil sector, which is putting pressure on their profitability, most of the companies want to go abroad. In such a situation, there are two options available - companies must either form a consortium or become one integrated company, sources said.

While favouring the merger proposal, Oil and Natural Gas Corporation is believed to have suggested the creation of two integrated entities.

Meanwhile, Indian Oil Corporation has recommended that the restructuring should lead to the creation of three entities led by IOC, BPCL and ONGC. All three entities would be integrated oil and gas companies, with a presence in refining and petrochemicals, marketing and crude oil production. IOC is also understood to have proposed that GAIL could be a stand-alone entity.

The Government had set up the committee on synergy in energy under Mr V. Krishnamurthy, keeping in mind the need for oil public sector undertakings to leverage their strength in their areas of core competence.

The Government felt that, in the evolving competitive environment, there could be a need for restructuring the public sector oil companies and it asked the committee to identify the most appropriate structure for the oil firms.

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