Can ONGC's Bikash Bora, NTPC's Rajendra Singh or, for that matter, SAIL's Arvind Pande become India's Tomaso Tommasi or Franco Bernabe or Franco Tato? Tommasi, Bernabe and Tato are chief executives of the world's three best-run public sector enterprises, STET, ENI and Enel, respectively.

All the three enterprises - oil and gas conglomerate ENI, electricity utility Enel and telecom giant STET - are based in Italy, the politico-economic system of which has some semblance to India's own.

I am posing the question in view of the union cabinet's decision to allow these Indian PSUs, along with six others, full financial and operational freedom to turn them into highly efficient and global enterprises.

The answer to the question, to my mind, is: most unlikely. It is not so much because most of our PSU CEOs are incompetent and lack vision as the overwhelming sense of possession our politicians and bureaucrats have of these public sector enterprises and their habitual desire to control them as an extension of their departments.

The control starts from the very selection of whole-time members of a PSU board and its chairman. There is the Public Enterprises Selection Board run by bureaucrats. They often go by the advice of the departmental minister while selecting a CMD and other key directors of a heavy-weight company.

Thus, the CMD automatically becomes a political appointee. And, once selected the CMD's main function is generally to keep the departmental minister, the secretary and the government representative on the board (a part-time nominee, usually of the rank of a joint secretary) happy. Then comes his `routine' corporate management job. This explains why major PSUs are headquartered in Delhi and not in their main operational centres like Upper Assam, Mumbai, Ranchi, Rourkela, Trichy, Bhopal, Mathura or Barauni.

Despite the proximity to the powers-that-be in Delhi, the PSU boards find it difficult to manage the affairs of the company and take independent management decisions when it comes to dealing with their labour unions, wages and salaries of workers and executives, investment and disinvestment plans, choice of project sites, award of contracts, merger and acquisition, export and import.

The ministry and bureaucracy seem to get involved in every key corporate decision making. The PSU management need their support to protect themselves from external agencies like the super-auditor, CAG, the Public Accounts Committee, Committee on Public Undertaking, Parliamentary consultative committees, the Hindi-prasar lobby, the Central Bureau of Investigation and the Central Vigilance Commission, to name some of the important ones.I was surprised that the union cabinet conveniently glossed over the real issues that are standing in the way of efficient commercial functioning of PSUs termed fondly as `Navratnas' (nine jewels), which together account for annual profits of close to Rs. 10,000 crore ($2.86 billion).

They have been granted only financial autonomy. But how many Navratna CEOs will exercise these financial powers entirely on their own? Will not the CAG, parliament, CBI and vigilance commission intervene on slightest provocations or if such decisions go wrong? The PSUs can simply appoint top financial audit firms, instead of the CAG, to scrutinise and certify their accounts, function on their boards' audit and appointment committees etc.

While exercising the financial autonomy, will a Navratna member be allowed to go scot-free if its investment decision goes wrong and the company loses crores of rupees? In the late 1980s, Tata Steel experimented with Korf technology and invested heavily in the energy optimising furnace (EOF) in Jamshedpur, which proved to be a failure. Tisco merely provided for the losses in its accounts and informed its shareholders. It was not troubled by vigilance officers or parliamentary committees. Will a PSU management be allowed the freedom to make mistakes? Not long ago, the ancestral residence in a remote village of a PSU director was raided by CBI men in search of his birth certificate since he was alleged to have fudged his age. His age became a matter of concern of the company, after nearly 30 years of service, when the powers that someone else be appointed in his place. He left the "Navratna" in disgrace.

The government's autonomy package can at best be termed as a half-hearted exercise aiming only at a limited result. It will not solve Bora's problem of outstanding receivables, amounting to Rs. 2,200 crore, against ONGC's 1996-97 net profit of Rs. 2,034 crore. It may not also help NTPC ensure quick recovery of dues from some of the fund-starved state electricity boards. The best way to weaken some state-owned dinosaurs is to starve them. Fortunately, Tommasi, Bernabe and Tato have no such problems. They have gone global without any restriction. STET has ties with Chilean, Bolivian and Cuban phone companies and now joining hands with AT&T in Brazil. Enel has tied up with Enron of the USA as Italy's power sector is being opened up. It is also diversifying into telecom.

ENI is already a highly successful global conglomerate. The last named company is better known in India through the activities of its associate, Snam Prageti, in the '80s. The reason behind their success is the Italian government makes no distinction between the public sector and the private sector in their style of management. All are seen as commercial enterprises and PSUs have full freedom to take commercial decisions, including influencing powerful politicians and bureaucrats in another country for business. Will the Indian government ever allow a Navratna PSU the freedom to go the Snam way to grab contracts abroad?

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.