Performing well-capped

His very first communication to staffers on May 25, 2001, said that one of the “C”s they needed to avoid was corruption and the second, a new year message, said that 64 of the 147 cases of corruption being examined against ONGC officers had been recommended by him. Given this background of speaking his mind, it’s hardly surprising ONGC chief Subir Raha fell foul with Petroleum Minister Mani Shankar Aiyar whose successor Murli Deora simply toed his line and refused to extend Raha’s tenure after five years.

The IIT Kharagpur alumnus who then did an MBA from Leeds (the MBA was sponsored by IOC where Raha began his career) bested Aiyar on most occasions — Aiyar opposed his mammoth Rs 30,000 crore expansion at MRPL and creation of a spanking new petrochemicals complex in a SEZ, which would have made ONGC a formidable player in the exports market of value-added products, and even wanted to increase the number of government directors at ONGC. Aiyar won the battle to oust Raha after he’d been removed as minister, though.

While Aiyar’s famous “maybe ONGC needs to have a partner like Cairn” was intended to mock the company’s poor exploration record, this was just half the story. When Raha took over ONGC, many platforms didn’t even have fitness certifications (for 41 days, ONGC never even had an insurance cover!), and his efforts at recertification helped slash the insurance premia (as compared to Rs 14,750 crore on exploration over five years, ONGC had to spend Rs 22,950 crore on just modernising/replacing equipment). While Deora now alleges several certifications at Bombay High were fake, he has not taken this up publicly. At 42 per cent, Raha’s discovery-to-exploration record on oil wells is no match for Reliance’s 71 and Cairn’s 80 per cent between 2000 and 2005 (development expenditure was upped 3.4 times in Raha’s tenure), but the PSU’s accretion of fresh

reserves is better than in the past decade or more, even though, unlike its private counterparts, ONGC has a lot more blocks in non-producing and frontier areas.

New enhanced oil recovery programmes for fields like Bombay High which were declining since the early 1990s resulted in a situation where, over 25 years, an extra 140 million tonnes of oil can be got, and the decline in production from 32 million tonnes in 1995-96, to 24 million when Raha took over is poised to reach 27 million next year.

Though Raha’s inter-personal relations leave a lot to be desired, few in even the private sector doubt his competence as a manager. MRPL, a joint venture between HPCL and the Aditya Birla Group had Rs 1,200 crore of accumulated losses when ONGC bought it, and turned it around in a record 368 days. It’s not just the oil price spiral that resulted in ONGC’s profits rising two-and-a-half times under Raha.