Oil and Natural Gas Corporation has proposed to set up a joint venture company outside the government purview, for retailing petrol and diesel.

The oil exploration giant, which has already secured a licence to set up petrol stations, has proposed to hold up to 49 per cent equity in ONGC Values Ltd (OVaL), which will be a non-government joint venture firm with financial institutions, company sources said in New Delhi.

No financial institution will hold more than 25.9 percent in the new firm.

ONGC chairman and managing director Subir Raha last week made a detailed presentation to Petroleum Minister Ram Naik, saying, "OVaL is essential for ONGC to achieve vertical integration on the value chain by recruiting skilled and experienced self starters for downstream business, acquiring assets at market-linked prices rather than the inherently skewed valuations and retaining ONGC's executive focus on oil exploration and production."

Petroleum ministry officials, however, said the proposal was unlikely to sail through as it may prompt other state-run firms like Indian Oil Corporation to hive off their lucrative retail business into a non-public sector company.

Raha argued that it was essential for OVaL to recruit skilled and experienced executives (employed or retired), at market oriented compensation.

Citing competition from existing players like IOC, Hindustan Petroleum Corporation Ltd, Bharat Petroleum Corporation Ltd and new ones like Reliance, Essar and Shell, he said, "We do not have the time to recruit graduate trainees and build them up over 15-25 years."