Privatisation Starts For This Rs 1.3 Lakh Crore Oil PSU: Oilfields Will Be Sold To Private Firms
In a letter written by Amar Nath, additional secretary (exploration) in the Ministry of Petroleum and Natural Gas, on April 1, ONGC chairman and managing director Subhash Kumar was given a 7-point action plan aimed towards raising oil and gas production by a third by 2023-24.
ONGC has been asked to sell its stakes in “non-performing” maturing fields of Panna-Mukta and Ratna and R-Series to private players .
It was also asked to consider bringing in international firms in KG-DWN-98/2 and in the Ashokenagar block in Bengal.
The plan dubbed ‘ONGC Way Forward’ includes recommendations to invite foreign partners in KG basin gas fields.
Previous Attempts By The Ministry
In the oil ministry’s 3rd such attempt, ONGC has also been called upon to divide its drilling, well, logging, workover and data processing services into separate entities.
The first attempt could not materialise due to resistance from ONGC against the plans of Directorate General of Hydrocarbons to hand over 15 producing fields to private companies in hopes of improvement in baseline estimate and its extraction.
The second plan went as far as the Cabinet which decided to bid 64 fields but received a weak response.
Divestment And Asset Monetisation
In the recent letter, it was mentioned that 2 years have gone by since the last development in February 19, 2019 and that it was time for non-performing fields to be selected for divestment and privatisation.
ONGC was encouraged to put forward market-friendly comditions such as lower royalty rates along with complete marketing and pricing freedom.
New avenues for monetisation was suggested which included stranded assets/discoveries consisting of design, finance, built and operate and GK-28/42 was one such field identified for this purpose.
Declining ONGC Contribution
The letter further elaborated on how ONGC’s influence on oil and gas consumption in India was on the decline with stagnant production for a long time now.
As a result, there was an increase in dependence on imports.
The same is evidenced by ONGC’s declining figures of 20.2 million tonnes of crude oil production in the fiscal ending March 31 (2020-21).
This is lower than the figures of the previous year which was 20.6 million tonnes and even further from the 21.1 million tonnes in 2018-19.