New Delhi: After refusing to recognise Oil & Natural Gas Corporation (ONGC) as its promoter for 15 months since the deal took place, Hindustan Petroleum Corp Ltd (HPCL) has finally been given an indication by the government that it will have to fall in line. According to sources, the appointment of Director (Finance) for HPCL by the Public Enterprise Selection Board (PESB) has settled the matter pertaining to HPCL’s ownership.
A stamp of approval from the govt
On June 17, ONGC Chairman and Managing Director Shashi Shanker was called by the PESB to be part of the panel that selects candidates, while HPCL CMD MK Surana who till now used to be part of the interview panels, was not called, sources said. This is being seen as an official move to recognise ONGC as HPCL’s parent company.
ONGC CMD on PESB panel to select HPCL Director Finance
According to sources, the ONGC CMD was invited to be on the interview panel to select the director because ONGC is the holding company of HPCL. In public sector enterprises where the government or its controlled company has over 50 percent stake, a PESB panel interviews and selects candidates for the post of Director. The panel consists of the Secretary of the administrative ministry and the chairman of the company concerned. According to the Department of Personnel guidelines, “In the case of subsidiaries, the full-time Chairman of the holding Company is invited to assist the Board.”
The Coal India model
The sources added that the Coal India model of governance, which has often been cited by the HPCL management, provides for the holding company CMD to sit on the panel for selecting candidates for director-level posts.
ONGC had in January last year bought the government’s 51.11 percent stake in HPCL for Rs 36,915 crore. As a result, HPCL became an ONGC subsidiary but the former has refused to recognise ONGC as its promoter ever since. In regulatory filings for five consecutive quarters, HPCL listed “President of India” as its promoter with “zero” percent shareholding and ONGC as its “public shareholder” with 51.11 percent shareholding of the company.