CANCUN (MEXICO): In an indication of India turning aggressive in its hunt for energy assets abroad, the government is drawing up ambitious plans to set up a ‘Sovereign Fund' that would help its state-run companies pursue acquisition of oil, gas, coal, LNG and other raw material in other countries in order to compete with China.

“We have already held a number of interactions and discussions with the Investment Commission on the issue. The proposed fund is being aimed at providing financial backing for acquiring assets in various shapes that will include all the raw material that India imports. It will not be limited to energy assets,” Petroleum Secretary S. Sundereshan told The Hindu on the sidelines of the 12th International Energy Forum here. Oil and Natural Gas Corporation Videsh Limited (OVL) had been told to pursue at least one major oil and gas asset every year.

“Funds will not be a problem for these companies. In the past also we have supported the efforts of Indian companies to acquire assets in various countries. The government has assured us that any such acquisition will not suffer for lack of funds,” he said. Various Ministries including Coal, Mines, Steel and Petroleum have held a number of rounds of discussions with the Investment Commission to present their case for the creation of such a fund in order to compete in the increasingly competitive scenario. Petroleum and Natural Gas Minister Murli Deora said Prime Minister Manmohan Singh had assured him that in case the state-run companies came up with interesting acquisition plans, the government would go out of the way to help them acquire such assets.

“We are holding talks with various companies in Russia, Qatar, Saudi Arabia for joint ventures or acquiring new energy assets. We are hopeful that 2010 will bring a lot of good news for the country on the energy front.” The Petroleum and Natural Gas Ministry has already asked the Finance Ministry to set up a fund using a part of the strong foreign exchange reserves. “Creation of such a fund would be very welcome if we are to compete with the Chinese,” said R.S. Sharma, Chairman and Managing Director of the Oil and Natural Gas Corporation.

China, with $2.4 trillion of reserves and a $300-billion sovereign fund, has outpaced India in the global quest for resources to feed the world's fastest-growing major economies. Chinese companies spent a record $32 billion last year buying oil, coal and metal assets abroad, while a $2.1-billion investment by OVL was India's sole energy acquisition. OVL last year bought Imperial Energy Plc for £1.4 billion ($2.1 billion) in India's biggest energy acquisition.