The Oil-Free Drill

India's most profitable corporate (Rs 6,198 crore net profit last year) has always been a Soviet-style PSU—corrupt, complacent and mammoth. The government last year brought in veteran oilman Subir Raha as the new chairman and managing director of ONGC with a clear mandate to revamp the monolith and clean up the mess. But Raha's aggressive plans to "reinvent ONGC" have run into vehement opposition from a section of his own board members, trade unionists and the powerful oil drilling and platform contractors lobby.

Insiders claim that senior executives and contractors have dispatched as many as 120 complaints against Raha to government agencies, including the PMO, petroleum ministry, the Central Vigilance Commission and the CBI. "Raha is destroying ONGC, its culture and future by these so-called reforms. He behaves like a dictator and thinks most of his directors are incompetent," says a director who is one of those at the forefront of the campaign. "We are planning to appeal to the prime minister to save the organisation."

Elimination of corruption in awards of multimillion-dollar contracts, material and technology acquisitions and over-invoicing is the most important component of Raha's revamp. "Let them criticise me. I have come here to deliver," says the unfazed chairman. There is widespread belief that nothing happens in ONGC without greasing palms. Offshore drilling and platform contracts involve payoffs into secret overseas accounts running into millions of dollars. Anger flashes in Raha's eyes when he is asked about this. "I'm determined to free ONGC of this menace. This is my commitment to my shareholders and fellow employees," he declares.

Raha has punished or suspended many corrupt employees and ordered inquiries against many others. Complains a director: "His rampant actions have created a fear psychosis, demoralising staff and paralysing decision-making." He claims that today, nobody wants to take any decisions fearing it might lead to an inquiry: "Our new mantra is: avoid decision-making, just enjoy the salary and perks."

But many do not agree. "Raha's clean-up efforts are beginning to pay off. Ninety per cent of the employees are with him," says Ashwini Kumar Mehra, the group general manager responsible for the Ankaleshwar and Gandhar oil and gas fields in Gujarat. "Employees now report for duty on time and there is an internal debate on how to end the widespread corruption." Says a deputy general manager: "I think only a couple of directors and some contractors are behind the anti-Raha noise."

"Corrupt ONGC officials are no longer so open in their demands," says a South Korean oilman who handles multimillion-dollar contracts with ONGC. Raha recently called the first-ever meet with all domestic and foreign contractors and suppliers in Mumbai "to rationalise purchase procedures". Says the Korean: "His actual mission was to tell us to dump middlemen and stop paying kickbacks."

Everything that happens at ONGC is big. The PSU is investing Rs 8,200 crore to revamp Bombay High, which has led to the floating of a fountain of lucrative tenders. There is an additional Rs 4,000-crore plan to enhance recovery at 14 oil and gas fields. ONGC has bought a 20 per cent stake in the Sakhalin-1 project in Russia for Rs 8,330 crore. There are similar high-cost investment plans for deepwater in India and for acquisitions in Iraq, Kazakhstan and Indonesia. "The size of contracts being so big, wheeler-dealers flock to ONGC like bees to honey," says a frustrated executive director. He says that there is so much political and bureaucratic intervention in ONGC that "even a tough, honest guy like Raha will eventually have to accept defeat."

Raha disagrees. "There is a deep desire among most of my fellow employees to transform ONGC into a world-class company. My company's weak points are far outweighed by its strengths." "How do the same negligence, indifference, incompetence, greed and fraud happen time and again?" he asked employees recently in Mumbai in an effort to "touch their heart and mind". Says Mehra, "He is trying to change our people by talking to them, appealing to their conscience. He is on the move all the time."

Many industry pundits, however, do not share Mehra's optimism. "As long as the government is the main shareholder of ONGC, Raha's revolution will remain a futile exercise," says an oil consultant who worked for ONGC for 20 years before taking premature retirement. "I discovered I was turning into a fossil, so I left the company," he says. "ONGC is a graveyard of extraordinary talents." Many energy majors like Reliance Industries, Cairn Energy, even Shell treat the PSU as happy hunting ground for the "bright boys".

Understandably, the Association of Scientific and Technical Officers (ASTO), the main employee union, which claims 20,000 out of 42,000 ONGC employees as members, is an anxious lot. "We initially supported our CMD in his revamp mission, but we now have reservations. Too many innocents have been punished or sidelined or transferred," says Shridhar Vyas, president. "Corruption is a serious problem, but that is no excuse for punishing innocents." Says an aide to Raha: "Such mistakes, if any, will be rectified within the next two months. We will ensure that no innocent is punished."

ONGC provides its employees some fabulous perks. Even a peon has access to a Rs 5 lakh heart surgery. "Money is not an issue. But most of us suffer from poor morale and motivation. Most are not even aware that ONGC is India's most profitable company," says an ASTO board member. ASTO must also be the only trade union in the country whose office-bearers travel by air, stay in posh hotels and even their regular meeting place in New Delhi, where the company is headquartered, is a luxury hotel. All paid for by ONGC, of course.

"We do not want our exploration and production activities—our bread and butter—compromised," says Vyas. His concerns are real. ONGC has not made any significant oil or gas discovery for years and hence has no alternative but to move into deepwater in the Arabian Sea and the Bay of Bengal and to aggressively go for acquisition of oil and gas assets overseas. But both demand that the PSU transform itself and become culturally compatible with the world outside.

ONGC is already setting up alliances with foreign MNCs for drilling and exploration of 21 deepwater blocks that it controls in the country. Similarly, it is learning to be in bed with US giant ExxonMobil, its majority partner in the Sakhalin-1 project. "Most ONGC employees know nothing about the world outside," says a retired ONGC chairman. There are senior managers who think ExxonMobil is a Chinese company and French giant TotalFinaElf has its home in Finland or Norwegian major Statoil is a south Indian firm. "I do not know how my friend Raha is going to convert such a PSU into a global player. He has taken too many impossible tasks upon himself," says the former chairman. Time will tell.