Mani Shankar Aiyar is the angry, young man these days. And the receipient of Aiyar's ire is the Directorate General Hydrocarbons (DGH). A clarion call by petroleum minister Mani Shankar Aiyar has targetted the DGH as being in urgent need for reform. At a recent interaction with members of the Confederation of Indian Industry (CII), the minister stressed the pressing requirement for a dramatic transformation of the DGH. In short, a transformation which translates into transparency: A revamp which would enable the DGH to effectively interpret the rules of the game -- the terms and conditions of E&P activity -- and "regulate the sector in the fairest manner possible". What exactly prompted Aiyar to single out the DGH? There has been significant speculation on this within petroleum circles: While one opinion maintains that he was offended by what he saw when

he visited the DGH office on Kasturba Gandhi Marg -- a lackadaisical staff and rows of empty rooms -- the other opinion, perhaps not entirely justified, suggests that the minister was actually swayed by a proposal from the persuasive Norwegian Ambassador Jon Westborg to help reform the DGH along the lines of Norway's Oljedirektoratet (Norwegian Petroleum Directorate). Whatever may have been the real reason for Aiyar's ire, there is no denying the dire need for an overhaul of the DGH -- in its lethargic decision-making process and its sluggish machinery. Ironically, empowering the DGH would mean giving it more power than what the minister himself enjoys. For, the DGH's ineffectiveness, in most part, stems from the petroleum ministry's near-complete control over the organisation. The DGH director general spends more time rationalising his decisions to mandarins in Shastri Bhavan than in his own office. An independent DGH does not mean that the petroleum ministry would have nothing to do with it. Instead, it would work in partnership with the government -- enjoying a degree of autonomy -- but not entirely in subordination to it. Of course, every file of significance in the DGH need not course its torturous way to Shastri Bhavan, and on to the minister's desk and back again. As a matter of fact, it may not be such a bad idea to style the DGH along the lines of the present-day Oljedirektoratet. After all, it was the original Norwegian model which was followed when the DGH was first set up. There is, in fact, a lot that India can learn on the oil sector from Norway, the tiny speck on the map of the world. It is Norway, with proven reserves of 10.2 billion barrels of oil, which is the third-largest exporter of oil and gas in the world. The Oljedirektoratet has often been adjudged as one of the best petroleum regulatory bodies in the world. Interestingly, the Oljedirektoratet's is not an entirely independent entity -- its powers are defined by policy parameters set by Norway's Ministry of Petroleum & Energy and the two have a synergetic relationship, working in sync with each other on most issues. The Norwegian regulator's ambit, however, is not limited merely to overseeing petroleum activities, but also encompasses the collection of petroleum taxes on behalf of the finance ministry. The Oljedirektoratet's responsibility extends to evolving cost-effective exploration and production practices, coordination across production licenses and in the building and dissemination of data on the petroleum industry. In January 2004, the safety and environment responsibilities of the Oljedirektoratet metamophosed into a Petroleum Safety Authority Norway (PSA), which now functions under the labour ministry. As far as India is concerned, it is not the extensive caveats contained in the PSC which are a cause for concern for private operators -- the provisions have been modeled along the lines of similar contracts in other countries -- it is the interpretation and implementation of these caveats which causes problems. Given effective powers, some functional autonomy and a breather from Shastri Bhavan babus, there is no reason why the DGH cannot become a desi imitation of the Oljedirektoratet. In the meantime, Aiyar could hum: I once had a DGH, or should I say it once had me.... oh, isn't it good, Norwegian Wood.... By Santanu Saikia