The Planning Commission has slammed public sector companies in the petroleum sector for using large amounts of public money to diversify and grow individual capacities in areas of no strategic significance to them.
Pointing out discrepancies in the investment policies of state-owned oil companies, the commission has also questioned the Ministry of Petroleum and Natural Gas for its laxity in monitoring the use of public money by these companies.
The discrepancies came to the fore during the recent discussions in the Planning Commission on finalising the outlays for 2009-10 for public sector undertakings the Petroleum Ministry. Details of the discussions were made available to Hindustan Times.
Citing petrochemicals as an area, where large fund outlays have been made by the oil PSUs, the Planning Commission said, "Given the lack of genuine competition and distorted price and tax structure, the efficacy of allowing five to six oil PSUs to use public money to grow individual capacities remains debatable. The absence of an overall strategy for the oil and gas sector is evident."
The Commission noted that there has been no increase in oil and gas production by the Oil and Natural Gas Corp despite an investment of Rs. 87,000 crore in domestic operations over the past seven years.
“This has resulted in ONGC's domestic operations becoming an high cost option,” the commission noted.
In case of the oil marketing companies like the Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL), the Commission pointed out that while these firms are projecting large internal resources, their operations are not generating any cash.
These companies, it said, are either borrowing or selling government bonds (received in lieu of funds the government owns them because the firms sell petroleum products below costs under a state-controlled mechanism) at a loss to meet dividend or cash obligations.