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Journalism of Courage
A sense of disbelief and disquiet runs through the 70,000-odd employees of four oil PSU firms 8211; Indian Oil Corp IOC, Hindustan Petroleum HPCL, Bharat Petroleum BPCL, and IBP. Their world view has completely changed: from being a part of navaratnas and mini navaratnas, their companies are now on being termed as on the road to sickness.
That8217;s a big fall, and one without any fault of these employees or their management. Will they get their Diwali bonus? Will companies be able to give them dividends on shares they hold as employees? And will some of them end up losing their jobs?
Such fears, real and imaginary, are indeed doing the rounds, according to a cross-section of oil marketing PSU employees contacted by The Indian Express. At the same time, there is some sort of assurance that the government will intervene and resurrect the situation.
Says a manager at IOC, 8216;8216;Till date, when our top management was warning the government of this adverse impact, no one was taking them seriously. Now that we have actually started to make loss, I am sure the government will intervene. How can the government allow these gold mines to go down?8217;8217;
The Options
Well, at present, the government has limited options. As IOC8217;s CMD Sarthak Behuria points out, 8216;8216;The only way out is to increase prices of petro products.8217;8217;
Petroleum Minister Mani Shankar Aiyar has no second thoughts on that. His problems, however, are plenty 8211; an unrelenting finance minister who is in no mood to restructure duties to reduce the burden of the hike on consumers. And an unrelenting Left who continues to threaten the government on any steep hike in petro product prices.
And given the fact that crude prices are set to touch 70 a barrel, the marketing firms actually need Rs 4-Rs 5 orice increase per litre in petrol and diesel. For LNG, that means a hike of at least Rs 20 per cylinder and Rs 5 per litre in kerosene. Given political pressures, that8217;s not going to be easy.
Meanwhile, the oil and petroleum ministries continue to slug it out on duty restructuring of petro products. The finance ministry is adament that no further cuts in excise or customs duty will be taken up. Even Aiyar8217;s repeated request to state governments to reduce the sales tax on petro products has fallen on deaf years.
The general view among the oil marketing firms is that it8217;s baffling that the sector, which contributes maximum to the national exchequer, is not getting any relief.
The Future
While short-term premutations and combinations are being worked out, the root of the present problem lies in the skewed pricing policy. Says Sanjay Kaul, director in the Indian School of Petroleum: 8216;8216;In the long term, the pricing policy based on import parity has to be modified.8217;8217;
And the resentment is building up as the very same policy has led to windfall gains for the upstream firms like ONGC. 8216;8216;All this is due to a skewed pricing policy which is pumping up the profits of the upstream firms at the cost of the downstream marketing firms.8217;8217;
Marketing firms, however, have not given up. Faced with the reality that Aiyar might not be able to deliver the hike needed to bring them back on board, the firms are looking at options of venturing into upstream ventures to perk up their balance sheet.
Says HPCL CMD M B Lal, 8220;We are looking into possibilities of participating in oil equities along with upstream firms8221;. In fact, HPCL has also written to the petroleum secretary to give them the flexibility of venturing into upstream ventures. The government, which had earlier stopped oil marketing firms from getting out of their core competence, may have no option but to agree.
Finally, the sheer numbers are speaking too. And they are big numbers. Some 70,000 employees and an allied 50,000 people employed in pumps and subsidiary business like lubes and so on. Sums up the IOC employee: 8216;8216;We have always met our social obligation to generate employment. We owe it to the nation. We only hope the government also owes something to us being the largest shareholder of these companies.8217;8217;
