Raha implements McKinsey despite board hostility

Vol 5, PW 13 (15 Aug 01) Exploration & Production

Courageous or foolhardy Clearly the former.

When Petrowatch reaches you on 15th August - India's 54th independence anniversary - ONGC's no nonsense chairman Subir Raha will be announcing plans to implement McKinsey's reform programme to the full, despite hostility from several of his peers on the board. Opposition to McKinsey within ONGC has not deterred Raha, and after hoisting the national flag at ONGC HQ in Dehra Dun, he'll make the plans public.

An internal note reveals his determination to shake ONGC's 40,000 employees out of their slumber. "The changes are aimed at removing the compartmentalisation that was creeping into the corporation's offices at different hierarchical levels," it reveals.

"This is aimed at doing away with complacency amongst the employees."Crucial to the 'Corporate Rejuvenation Campaign' is ONGC's recast into an asset-based corporation from its current Soviet-based "functional" structure. Petrowatch learns ONGC hopes the McKinsey-inspired transformation will improve its oil recovery factor by up to 20% - an additional 2.5m tonnes (17.5m barrels) a year.

Key reform elements are: "Assets" at ONGC will be divided into (a) Exploratoryand (b) Production to be managed by "Asset Managers" who will be either of General Manager or Executive Director rank "depending on whether the assets are small or large". "Asset Managers" to be given independence in decision making with powers to spend up to Rs25cr ($5.5m) in procurements and contracts.

As reported in the last issue of Petrowatch, appointment of a full-time "Director Corporate Services" to the board of directors. Each director's responsibilities to include exploration (offshore and onshore), technology, institutes, human resources and corporate services, purchase, planning, environment, safety and health.

Company Secretary, Chief Information Officer, Corporate Services and Corporate Communications to report directly to Raha, who will also be directly responsible for all vigilance cases.

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