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Rediff.com  » Business » Top execs in PSUs may get extension

Top execs in PSUs may get extension

October 23, 2013 14:04 IST

The run-up to next year’s general elections might see some of the top executives of government-run companies getting unlucky. And, the period could become the best in the lives of those waiting in the wings. 

The fate of both sides hinges on a Cabinet note that has been in the works at the Department of Public Enterprises.

Once the proposal is approved, ONGC Chairman Sudhir Vasudeva, IndianOil Chairman R S Butola and Hindustan Petroleum’s S Roy Choudhury - all close to their retirement dates - might get extensions.

Besides the immediate beneficiaries, R N Nayak, the current chairman of Powergrid Corporation of India Ltd (PGCIL), the best-performing public sector units (PSUs) in the power sector, stands to gain. Nayak is due to retire in 2015, a year before his tenure would have ended. The new norms could ensure Nayak remains chairman until 2017.

A group of ministers (GoM) headed by Finance Minister P Chidambaram, looking into public sector reforms on the basis of the suggestions of the S K Roongta committee, had cleared this proposal in May.

This was to extend the service of executives for up to two years, even if they attained the age of superannuation (60 years), provided they had a “good track record”. 

The proposal covers officials of the level of deputy general managers and above. Besides, the GoM had also approved a tenure of at least three years for heads of PSUs, even if they reached their superannuation age before that.

The petroleum ministry had strongly supported the move, saying it might help ensure the country’s energy security.

However, officials indicated the proposal might not be cleared in an election year for fear of allegations against the government. Appointment of senior government functionaries, including those of executives in public sector companies, sees intense lobbying, as stakes are high.

Recently, in the case of Power Finance Corporation (PFC), the serving chairman did not know about his extension or removal till the last moment. The five-year tenure of Satnam Singh had ended on July 31.

The government allowed him to continue “till further orders”. In the late evening of September 13, he was asked to hand over the charge to M K Goel, director (commercial). Singh had some five years more to go before turning 60 but was denied a vigilance clearance.

Though the Cabinet note has almost been finalised, the progress is slow.

“The next batch of officials might be lucky enough to get this, as the clearance is likely to happen during the tenure of the next government,” said an official source close to the development. When asked about the proposal, the chairman and managing director of a state-run company told Business Standard: “My service is to get over early next year. Many of us are pinning hopes on this. But there doesn’t seem to be any headway since the GoM clearance in May.”

Besides the ambiguity surrounding extensions, even confirmation of new appointees sometimes takes more than n year.

“The extension should be given on the basis of candidates’ merit. If a person is physically fit, he should be given a longer tenure to create a policy-level continuity,” said U D Choubey, director-general, standing committee on public enterprises.

Under the current norms, a candidate who has two years before superannuation is selected from within the company. For outsiders, candidates need at least three years. Board-level appointments are usually for five years. The Appointments Committee of the Cabinet gives extensions if an incumbent is yet to reach 60 years of age.

Shine Jacob & Sudheer Pal Singh in New Delhi
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