The Indian government will consider merging some state-run energy firms to make them more competitive, but there is no formal proposal yet to restructure the companies, oil minister Mani Shankar Aiyar said on Wednesday.
He said state-run Indian firms were competing with each other to acquire equity oil abroad and spending heavily to upgrade petrol stations to attract customers, but were less enthusiastic about providing kerosene and cooking gas in rural areas.
"We are examining various options for optimising their inherent core competence, which stretches from (finding) gas in remote areas to providing candies to children at petrol pumps," Aiyar told reporters on Wednesday.
Oil industry officials say one option being examined was to merge refining giants Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd with India's largest exploration firm, Oil and Natural Gas Corp (ONGC).
Another option was to merge Oil India Ltd (OIL), a small exploration company with operations primarily in north-eastern India, with Indian Oil Corp (IOC), India's largest refiner, officials said.
Aiyar said his motive was to strengthen the state-run firms, in line with the Common Minimum Programme, the declared policy agenda of the federal government.
The coalition government, backed by communist parties, is committed to strengthening public-sector firms, subsidising products such as kerosene and cooking gas, and ensuring that the benefit of economic reforms reach the poor.
Merging some state-run firms would be considered in line with the political objectives, officials say.
"I'm looking at several options and I'm glad that a public debate is being generated but there is no formal proposal right now," Aiyar said.
An oil ministry official said the government was keen to make state-run firms strong enough to compete with global firms such as Royal Dutch/Shell, which plans to enter India's retail market, and private refiner Reliance Industries, which is also setting up gas stations.
Oil ministry officials say they are also concerned about the competitiveness between the chairmen of some state-run firms and their plans to enter new businesses.
ONGC is considering importing liquefied natural gas, setting up power plants and has taken over Mangalore Refinery and Petrochemicals Ltd, amid strong protests from a refining major, oil ministry officials say.
ONGC, for its part, has been opposing demands of other firms to be given a stake in its overseas subsidiary, ONGC Videsh, which has acquired equity in oil and gas projects in several countries including Russia, Sudan and Vietnam.
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