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The government calls the Oil and Natural Gas Corporation (ONGC) a ‘maharatna’ (literally meaning most valuable jewel) public sector undertaking (PSU). A PSU gets “Maharatna" status when it logs more than Rs. 5,000 crore of net profit for three consecutive years oe an average annual turnover of Rs. 25,000 crore for three years, or should have an average annual net worth of Rs. 15,000 crore for three years.

It could not be more apt in ONGC’s case since it meets all three criteria. In fact, ONGC, arguably one of the crown jewels in the government’s PSU collection, is so large, and so valuable, that it owns another Maharatna PSU, HPCL, and two ‘miniratna’ PSUs.

ONGC was ranked 11th in Platt’s ranking of global energy majors and ranks fourth among Indian companies which figure in the Fortune 500 global list of largest corporations. It is not only a huge wealth creator for the government but is strategically crucial, accounting for 71 per cent of India’s domestic energy production, while its subsidiary ONGC Videsh, which acquires energy assets overseas, is key to India’s energy security plans.

Given the criticality of ONGC, it is astonishing that the government, as ONGC’s principal owner with a 58.9 per cent direct stake and a further 10.7 per cent stake through state-owned financial institutions, has been unable to find a full-time head to manage ONGC more than 17 months after the post fell vacant.

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ONGC has been without a full-time chief executive (the chairman and managing director roles in ONGC, like most PSUs, are combined into one) since April 2021. Subhash Kumar, finance director and the senior-most director on the company board, was named officiating head after Shashi Shanker superannuated on March 31, 2021. Kumar retired on December 31, 2021 and was ‘succeeded’ by Alka Mittal, ONGC’s HR head, who was given an additional charge.

Mittal’s appointment, albeit temporary, created a buzz in corporate circles as she would have become the first woman to head ONGC if she had been confirmed in the job. As things stand, she is set to retire at the end of this month and media reports indicate that, yet another temporary head will be picked, till such time as the government makes up its mind on the panel of names recommended by a search committee.

The committee was formed back in February, a good 10 months after the top job fell vacant. This itself exemplifies the lackadaisical attitude of the government as promoter towards the PSUs, since in any well-run company, a succession plan would have been initiated before the incumbent departs and not months after. Worse, the government took another six months to finalise the terms of reference for the search committee.

Such glacial pace of decision-making reflects the government’s lackadaisical attitude towards PSUs, even though many, including ONGC, are also publicly held and therefore have to not only comply with listing requirements of exchanges but also keep in mind the interest of other shareholders.

However, both the elected and the administrative arms of government continue to think of PSUs as mere extensions of their personal fiefs, and not as independent corporations. The fact that such a large and important company was allowed to run for so long with acting chiefs tells us that as far as the government was concerned, it did not consider the presence of a full-time – and therefore fully accountable CEO to be a necessary requirement. The thinking may even be that when ministers and ministry mandarins are anyway calling the shots, why bother with a CEO.

This makes a mockery of the government’s oft-repeated claims of making PSU managements more empowered and autonomous. It also highlights the lack of corporate governance in PSUs. A 2018 study by proxy advisory firm Stakeholders Empowerment Services (SES) found that only 14 out of 48 PSUs surveyed were fully compliant. As many as 22 were non-compliant in board composition, crucially in independent directors. As per primeinfobase.com, a majority–more than two-thirds of the 54 listed PSUs–were non-compliant in terms of the number of independent directors on their boards.

The government has also not revised the corporate governance guidelines for central PSUs which were issued back in 2010, despite widening divergence between those guidelines and those prescribed under the Companies Act and SEBI regulations for listed companies. It is high time the government walked the talk on corporate governance in PSUs. What is sauce for the goose must be sauce for the gander.

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