Mittal finds India tough
After hurdle in Jharkhand, L N Mittal faces problem in JV with ONGC.
By Sanjay Dutta, TNN |
NEW DELHI: LN Mittal may have succeeded in reinforcing his image as the world’s numero uno takeover tycoon by wrenching control of European steelmaker Arcelor. But when it comes to doing business in his home country, the most celebrated Indian is finding the going tough.
First, Mittal hit bureaucratic bump in Jharkhand over his plan to set up a steel plant. Now, he is struggling to keep his Indian energy ventures with state-owned explorer Oil and Natural Gas Corporation going. ONGC-Mittal Energy Ltd (OMEL) was set up with the aim of creating energy security for India by acquiring oilfields abroad while ONGCMittal Energy Services Ltd (OMESL) was created for trading and transporting oil.
Worried over signals to scuttle OMESL, Mittal has sought the oil ministry’s intervention for getting ONGC to act as a true partner. OMESL has been losing out on the huge crude supply and transportation business from state-owned refiners like IndianOil Corporation , Bharat Petroleum and Hindustan Petroleum. This is because the JV has not been registered with these firms, though months have passed since it was set up.
Problems don’t end there. ONGC recently spiked the plans for setting up an India office and a technical centre in Delhi for both the JVs. It has also put a bar on deputation of its executives to both JVs. Recently , even interviews for hiring executives were cancelled at the last moment. Unconfirmed reports say OMESL CEO SK Sharma was asked to move to OMEL as the number two but he declined.
The issues were raised with ministry officials by Mittal during his thanksgiving trip in the wake of the Arcelor victory last month. Reiterating his commitment to creating India’s energy security, Mittal has reminded the ministry of those discussions and sought an early resolution.
Industry insiders blamed the ministry for ONGC’s coldness towards the Mittal JVs. They say it is part of the move to dismantle former chairman Subir Raha’s initiatives.
First, Mittal hit bureaucratic bump in Jharkhand over his plan to set up a steel plant. Now, he is struggling to keep his Indian energy ventures with state-owned explorer Oil and Natural Gas Corporation going. ONGC-Mittal Energy Ltd (OMEL) was set up with the aim of creating energy security for India by acquiring oilfields abroad while ONGCMittal Energy Services Ltd (OMESL) was created for trading and transporting oil.
Worried over signals to scuttle OMESL, Mittal has sought the oil ministry’s intervention for getting ONGC to act as a true partner. OMESL has been losing out on the huge crude supply and transportation business from state-owned refiners like IndianOil Corporation , Bharat Petroleum and Hindustan Petroleum. This is because the JV has not been registered with these firms, though months have passed since it was set up.
Problems don’t end there. ONGC recently spiked the plans for setting up an India office and a technical centre in Delhi for both the JVs. It has also put a bar on deputation of its executives to both JVs. Recently , even interviews for hiring executives were cancelled at the last moment. Unconfirmed reports say OMESL CEO SK Sharma was asked to move to OMEL as the number two but he declined.
The issues were raised with ministry officials by Mittal during his thanksgiving trip in the wake of the Arcelor victory last month. Reiterating his commitment to creating India’s energy security, Mittal has reminded the ministry of those discussions and sought an early resolution.
Industry insiders blamed the ministry for ONGC’s coldness towards the Mittal JVs. They say it is part of the move to dismantle former chairman Subir Raha’s initiatives.
ADVERTISEMENT
The insiders say the ministry has not been able to target the other venture, OMEL, as it has bagged a lucrative oilfield in Nigeria where it is proceeding with plans to invest $6 billion on developing the fields, setting up a refinery and power plant. It has also worked with ONGC Videsh during the latter’s acquisition of a Syrian oilfield. Besides, it is pursuing opportunities in several other countries.
ONGC sources, however, deny any design behind OMESL’s issues. They say there is no effort to close the trading venture but the two sides were trying to sort out transparency issues that go with trading. ‘‘ Oil trading is a new area both for ONGC and the ministry and there are apprehensions over transparency ... there are suggestions on the table to overcome them and we are in discussion,’’ one top company official said.
Whatever officials may say, the fact remains that Mittal had to write to the ministry.
STUCK IN OIL SLICK
LN Mittal has sought oil ministry’s intervention to save his twin joint ventures ONGC — ONGC-Mittal Eneregy Ltd (OMEL) & ONGC-Mittal Energy Services (OMES) — which he fears are being scuttled by the PSU partner.
ADVERTISEMENT
OMEL is losing out on business from IOC, BPCL and HPCL as it has not been registered with these firms, despite its inception months ago ONGC also spiked plans for setting up India office and a technical centre in Delhi for both the JVs. It even barred deputation of executives to the two JV companies. Even interviews for hiring executives was cancelled at the last moment Industry insiders blame the ministry for these troubles saying it is part of a move to dismantle former ONGC chairman Subir Raha’s initiatives
Start a SIP with as low as ₹500 with ET Money App!
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
