ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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A Mega Oil Company and India’s Energy Security

Referring to a budget speech proposal to merge all public sector oil companies, this article points to the prerequisites for enhancing the performance of the Indian oil industry and making it globally competitive. It argues that a merger makes sense only if it means acquiring financial muscle and technological competence to overcome the challenges of rising demand for oil and gas together with a natural decline in domestic production.

In his budget speech for the financial year 2017–18, Finance Minister Arun Jaitley announced,

We see opportunities to strengthen our CPSEs [central public sector enterprises] through consolidation, mergers and acquisitions. By these methods, the CPSEs can be integrated across the value chain of an industry. It will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for stakeholders. Possibilities of such restructuring are visible in the oil and gas sector. We intend to create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies. (Para 105)

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