Himanta Sarma wants 5% stake in Oil India

Vol 24, PW 18 (29 Jul 21) People & Policy
       

Oil India could soon find it easier than ever before to secure cumbersome state government approvals for E&P activity in Assam.

This report learns the Assam state government led by BJP chief minister Himanta Sarma could soon be approaching Delhi for a nominal 5% stake in the company. "Sarma talked about this when he visited Oil India's HQ at Duliajan (on June 20)," reveals a well-placed source.

"He (Sarma) said this would make the (Assam) state government an important stakeholder." Under consideration is a move that would see the central government sell 5% of its 56.7% stake to Oil India, leaving Delhi with a controlling 51.7% stake.

But for now, Sarma's idea is just that - an idea. "Holding a stake in Oil India hasn't reached the discussion level yet," confirms our source.

"One still needs to look into how any valuation is carried out, but there's a lot of brainstorming underway about the oil and gas sector in the (Assam) state government." Not in doubt is that the benefits of a 5% state government stake outweigh the inconvenience of more political interference, not just from Delhi but from local Guwahati politicians.

"Oil India's biggest fear is privatisation, or the government hiving off its fields," we hear. "If the state government takes a 5% stake, it can block any attempt to break up the company."

Other advantages are at the operational level: forest and environment clearance for new wells or fields will become easier if the state government holds 5%. Scarred by the BGN-5 well blow-out on May 27 (2020), Oil India needs all the help it can get to salvage its battered reputation among mid-level bureaucrats reluctant to sign off on new projects.

"Those encounters will be less troublesome," adds our source. "The entire relationship (with Oil India) will change."

Contacted for a comment, Oil India chairman SC Mishra's office said it was unaware of any move by the Assam state government to take a 5% stake in the company.