PSU NEWS
Oil PSUs merger may create job cuts employee issues
NEW DELHI . Finance Minister Arun Jaitley had in his Budget 2017-18 speech said that the government sees opportunities to strengthen Central Public Sector Enterprises (CPSEs) through consolidation, and mergers and acquisitions. He specifically spoke about a proposal to create an integrated government-owned ‘oil major’ in such a manner.
“It would also create an entity that is better placed to compete globally for resources, and less vulnerable to shifts in oil prices,” Fitch Ratings said in a report. “However, a merger would face significant execution challenges, particularly in terms of managing the integration of employees, addressing overcapacity in the merged entity, and winning the backing for the merger from private shareholders.”
While the merged entity will be able to save on costs and improve operational efficiencyand reduce transport costs, political sensitivities will likely limit job cuts, leading to personnel-related issues and potential overcapacity, Fitch added.
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