After weeks of delay, Oil Minister S Jaipal Reddy has agreed to clear appointment of two independent directors on board of Oil and Natural Gas Corp (ONGC), a requirement that was must for the state-owned firm's public offering next month.
ONGC has six functional directors, besides chairman and managing director. It also has two government-appointed nominee directors taking the total strength to nine.
The company, at present, has four independent directors and needed five more to meet market regulator SEBI's listing norm of having equal number of executive and non-executive directors, industry sources said.
However, since ONGC is without a permanent Chairman and vacancies of Director (Human Resources) and Director (Exploration) have not been filled, the effective strength of full-time functional directors together with government nominee directors was down to six.
Sources said the oil ministry under the previous minister Murli Deora had shortlisted five independent directors but before the file could be signed, a Cabinet reshuffle brought Reddy at the helms of affairs.
Reddy, they said, has agreed to clear appointment two out of the five shortlisted candidates to meet the SEBI's listing norm for now. It is unclear if he will change the remaining three.
Sources said the names cleared will go to the Cabinet Committee on Appointments (ACC) and final approval may come just in time for ONGC to file red herring prospectus for the public offering in the week beginning February 21.
ONGC's follow-on public offering (FPO), through which the government plans to sell its five per cent stake to raise about Rs 13,000 crore (Rs 130 billion), is to hit the market on March 15.
Government headhunters Public Enterprise Selection Board (PESB) has identified successors for both the posts but Reddy is yet to approve of their names.
PESB made the selections when Deora was the Oil Minister. PESB is yet to hold interviews for Director (Human Resources), a post which fell vacant in July last year when A K Balyan moved to Petronet LNG as Managing Director.
A K Hazarika, Director (Onshore) and the seniormost on ONGC board, is officiating as Chairman and Manging Director.
Last month, the Government had appointed Bank of America Corp, Nomura Holdings, HSBC Holdings Plc, JM Financial Services, Citigroup Inc and Morgan Stanley to handle the FPO.
Post offer, the government stake in ONGC would come down to 69.14 per cent from the current 74.14 per cent.