A single energy behemoth, created after the merger of oil PSUs, would have too much power over India's energy strategy, says report
The government’s plan to merge India’s oil companies will harm consumers and energy security, according to a paper in the Economic and Political Weekly by Bhamy V. Shenoy, a consumer activist and former oil industry professional. The government wants to create an energy behemoth on the lines of Chevron and Rosneft, one that has more clout to negotiate on deals such as crude oil purchases. Shenoy argues that talk of benefits arising from economies of scale are overblown as the cost of discovering crude or production is not dependent on the size of the company but on technical expertise: a smaller company has a better chance of retaining talent than a large, bureaucratic organization. He also notes that India’s public sector companies are well capitalized. Moreover, a single oil giant would also hold undue power and influence over the country.