What is, however, pertinent is that the government's present directive is just the opposite of its stated policy a year ago, when it insisted that all major public sector oil company must take advantage of the liberalised environment to diversify rapidly. The flip-flop in government policy directives have left the public sector oil majors confused. The top brass of these companies are now rushing back to the drawing boards to re-work their strategies. Diversifications which had been drawn up by spending considerable time and money will now have to be scuttled in deference to the wishes of the petroleum ministry.

Top ONGC sources said that the government's fiat will now mean that the memorandum ofunderstanding (MoU) with the National Thermal Power Corporation (NTPC) for a gas-based power complex in Uran may have to be scrapped.

Another diversification plan - a paraxylene plant in Jamnagar - has also been pushed into cold storage while the ONGC brass reorients itself to the new diktat of doing what it is supposed to be best at.

What has also been ruled out are attempts by ONGC to take a stake in the Bina refinery and the Numaligarh refinery in Assam.

The petroleum ministry's directive also means that OIL will not be able to go ahead and take an equity stake in Numaligarh refinery. The three million tonne refinery in Assam is expected to be commissioned by next year.

The much touted move by the petroleum ministry to amalgamate the refining and downstream facilities of Bongaigoan Petrochemicals Ltd. with OIL is now surely shelved. The ministry is of the view that OIL will not be able to handle a downstream facility at this juncture as it will lead to diffusion of skills and resources.

OIL hadalso planned to diversify into power projects using associated gas available from its oil fields. This move now stands firmly scuttled.

Well placed sources said that similar directives - to stick to core competence and areas of strength - may also be issued to other public sector oil companies, including Indian Oil Corporation (IOC). The IOC had drawn up ambitious plans to get into the upstream sector and it had even entered into strategic joint ventures for exploration purposes. But such plans may have to be abondoned if the same yardstick, which has been applied to OIL and ONGC, is used on IOC.

The same is true for the two public sector refinery companies - HPCL and BPCL. But whether the ministry will order the two refining companies to stick only to their areas of strength and not look elsewhere remains to be seen.