Theme: Corporate Governance
News Item:
Government tries to inject the DGH (director general of Hydrocarbons) into the board of ONGC. ONGC chairman Subir Raha threatens to quit citing conflict of interest. Law minister comes out in favor of Subir.
Decoding the matrix:
DGH is the proxy regulator for upstream oil companies i.e. companies in exploration and refining (there is no clear cut regulator appointed for them). The regulator who also is in the board is a clear cut case of conflict of interest because if DGH issues any directive to oil companies, Reliance may doubt its integrity.
How this relates to the theme:
Corporate governance, in part means the promoter (in this case the government) doesn’t interfere with the management in any way. Unfortunately, there is a lot of interference of ministers (favoritism and nepotism) and government itself is doing just this. Only this time, Subir Raha has dared to show some spine, a rare commodity in the anatomy of the Indian Bureaucracy. Fortunately, with law ministry and Sebi coming in his support, the government has deferred the decision.
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Eclectic collection of articles ranging from Indian economy to my class on economics, serious to satire, childhood to future.
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- sivananth
- IIM Lucknow (Batch of 2007), slightly eccentric.
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1 comment:
An extension to what Sivananth wrote, Corporate Governance expectation from GoI is like looking for a needle in a haystack. Issues are crowding my mind, but i restrict myself to the recent and a bit more intriguing one.
Take a look at the aviation industry. THE next boom segment, with a multitude of players, only hampered by high aviation fuel costs. To arrest the sagging bottomlines, major domestic players like Jet Airways, Air Sahara n Air Deccan have come to an 'arrangement' to increase fares by 10% from Oct16.
To me, this stinks of cartelization; in an era whan the govt has been harping on increasing competition in sectors as varied as aviation and telecom. Yesterday TRAI also hinted at cartelization in certain segments of Indian Telecom industry.
All this is happening right under the nose of the sector regulators DGCA and TRAI. Then to expect Corporate Governance in the high-stakes oil sector would be even more unrealistic. While the issue of DGH being on ONGC's board has subsided, there is a very strong possibility of it coming up again in near future. After all the latest mantra is 'All's well that oils well'!!!
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