The joint venture's profits has to be shown not only in its records but in the books of the two parent companies. While these profits are liable for taxation in the JV, it is still not clear if this will also apply to IOC and ONGC individually. This issue will now be reviewed by tax specialists and a decision is likely in a fortnight.

If double tax payment is inevitable, sources say that the two oil PSUs may not go ahead with the plan. Alternatively, they will examine other avenues to alleviate the tax burden. The JV is quite crucial as it will mark the first serious effort by IOC and ONGC to work together since the time they announced formation of a strategic alliance early last year.

To be headed by SN Jha, director (pipelines) IOC, and supported by directors from the PSUs, the new company will explore opportunities in training and consultancy services both here and abroad. Sources say that the combined strengths of these PSUs will help offer a range of skilled services. ONGC has various institutes all over the country that work on specialised areas like exploration, geo-data processing, reservoir studies, drilling, engineering & ocean technology, oil & gas production.

IOC, in turn, has over a dozen training centres that offer specialised programmes in finance, human resource development, business administration and other fields. While the corporation has two premier institutes - Haldia Training Management and IndianOil Institute of Petroleum Management near Delhi - there are many others for different units like refineries, pipelines. A joint venture will be an attractive option as it has the potential of becoming an important profit unit. ONGC has already acknowledged the importance of its centres and with McKinsey has been considering hiving off lucrative operations like drilling. The upstream major also believes that there is enough revenue to be made through each unit by charging independently for services rendered.

IOC, similarly, conducts various advanced programs in specialised fields through the year. The company has excellent infrastructure which gives it an advantage over other institutes. A fusion of skills of both PSUs will create an entity that will attempt to sew up opportunities both in India and countries overseas. A beginning has already been made for a specific training program in Bangladesh Petroleum Corporation where the joint venture has been shortlised with a handful of other companies.

A decision is awaited during the next few months by which time opportunities will have been discovered in other neigbouring countries.