India’s state-owned oil company, Oil & Natural Gas, has given its acting chairman, R.S. Sharma, the role permanently after a 14-month search failed to attract private-sector candidates for a job that pays about $20,000 a year.

Sharma, 56, won final approval from the office of the prime minister on Wednesday. He replaced Subir Raha, who stepped down in May 2006. His tenure will continue until January 2011. All 71 applications for the job to run the most profitable Indian company were from executives at state-run companies, Raha said.

Oil & Natural Gas said it planned to increase pension and medical benefits because wages were capped at state-run companies, where attrition has increased sixfold in two years.

“It’s a very telling commentary on public-sector compensation,” Raha said. “Anyone who is working hard is getting daily offers and those who are staying back are guys who don’t have any.”

Employee turnover at government companies is impairing growth at a time when nonstate rivals are expanding. Since Raha stepped down, Oil & Natural Gas lost its ranking as the most valuable company in India to Reliance Industries, headed by Mukesh Ambani, the richest man in India.

Sharma was refused confirmation in February because the government wanted to attract private-sector applicants, the Indian oil minister, Murli Deora, said in February. Raha retired last year after 35 years in the industry.

By contrast, the Exxon Mobil chief executive, Rex Tillerson, earns more in two days than Raha did in a year. Tillerson was paid $4.78 million, including salary and bonuses, or 239 times Raha’s pay, according to Bloomberg data.

In the year ended March 31, Oil & Natural Gas profit was 43 percent more than the 109.08 billion rupees, or $2.69 billion, at Reliance. A year earlier, Ambani, chairman of Reliance, earned 245.1 million rupees, according to the company’s annual report. That is 300 times Raha’s pay.

In the past two years, almost 3,000 employees have left Oil & Natural Gas, the human resources director, A.K. Balyan, said. In the past 18 months, 370 midlevel managers have left, mostly geoscientists and engineers.

“When people with 10 to 15 years of experience leave, it creates a void,” Balyan said. “It is in critical areas – people who have 10 to 15 years of experience and command a good market value.”

Graduates recruited out of college typically quit state-run companies after about 10 years, before the companies have earned adequate returns on their investment in the employees, said Ashok Singh, president of the Oil Sector Officers Association, which represents 45,000 supervisory staff members in state-run oil and gas companies.

“Knowledge migrates to the competitors,” Singh said. “Instant vacuum is created in the organization.”

Singh has petitioned the government to allow companies to spend at least 5 percent of their revenue on wages, an increase from 1 percent now. Reliance spends 8 percent of sales on salaries, Singh said.

Annual salaries of chief executives of all state-run companies listed on the Bombay Stock Exchange’s 30-share Sensitive index added up to $81,970 in the year ended March 31, 2006, less than 2 percent of Ambani’s pay, according to Bloomberg data.

“The crisis is already staring at us in the face,” Raha said. “ONGC is facing problems retaining drillers to work on their platforms. They are either joining private companies in India or going overseas with five times the salary.”

Other state-run companies are facing a similar situation. Mahanagar Telephone Nigam, a state-run operator of phone services in New Delhi and Mumbai, lost 11 percent of its employees in the past four years, according to Bloomberg data. As of March 2006, Bharat Heavy Electricals, the biggest electrical equipment maker, had lost 10 percent of its employees, which number 42,601.

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