BusinessLine: Petronet LNG: Licensed to Kill?

On April 27, 2015, the petroleum and natural gas minister informed Parliament that Petronet LNG was being investigated for alleged irregularities in gas purchase contracts. Importantly, he noted that the findings of a government committee constituted for this enquiry “are under examination in consultation with Central Vigilance Commission” (CVC).

The minister’s written statement is important because Petronet LNG was knowingly and by design structured to operate as a private company outside the purview of the CVC and the Comptroller and Auditor General (CAG). This was achieved by limiting the combined stake of Petronet’s four public sector owners, namely GAIL, ONGC, IOC and BPCL, to 50 per cent, distributed equally among the four.

In reality though, Petronet operates with even less autonomy than its dominant public sector owners because the incumbent secretary to the petroleum and natural gas ministry not only sits as Petronet’s chairman, but also controls the dominant shareholder group. Nothing of any commercial importance happens in Petronet without the involvement of the ministry of petroleum and natural gas and the direct nod of its incumbent secretary. MORE