Unions against HPCL and BPCL privatisation

Vol 6, PW 24 (12 Feb 03) People & Policy

WHEN NAIK MET Ashok Singh on 5th February he must have lent a sympathetic ear to the anti-privatisation petition submitted on behalf of the Oil Sector Officers Association.

Why Naik has used many of the below reasons himself to oppose any sale. Since nationalisation, Hindustan Petroleum has invested more than Rs9, 000cr ($1.8bn) and the company's free reserves today stand at over Rs5, 500cr ($1.14bn).

By contrast the capital plus reserves of Esso, the previous owner, stood at only Rs16.80cr ($3.5m) and the gross block of fixed assets of both Esso and Caltex's Indian operations was worth only Rs50.36cr ($10m) In the 28 years since nationalisation, HPCL has grown into a full-fledged refining and marketing company with a turnover exceeding Rs50, 000cr ($10.4bn) from a meagre turnover of Rs6, 000cr ($1.25bn) at the time of take-over The value of HPCL's assets has gone upto Rs20, 000cr ($4.2bn) against the take-over price of Rs49cr ($10.2m). Today, HPCL's assets replacement cost would be over Rs50, 000cr($10.4bn) During the 1971 India-Pakistan war, foreign oil marketing companies Esso, Caltex and Burmah Shell - with refining and marketing operations in India - did not help the government maintain adequate fuel stocks.

"Their response was lukewarm for the supply of petroleum products also." And the government had to depend solely on state-owned Indian Oil. Contrast this with the recent Kargil war when "you would appreciate that national oil companies HPCL, BPCL and IOC maintained and ensured uninterrupted fuel supply to the armed forces.

Hence, the petroleum sector is crucial to the National Defence Security as well as Energy Security." One of the main arguments of the disinvestment lobby is that in state-owned companies across India, wages amount to 20% of sales against 8% in the private sector. Yet in state-owned oil companies, wages amount to just 1.2% of sales.

"Thus the oil sector is far more competitive than the private sector in India." As an alternative to privatisation the OSOA wants a MoU with the government assuring international standards of financial and operational performance as well as service to the customer. "The above stated issues are of grave national importance, therefore the decision of the strategic sale of HPCL is totally against the interest of the nation, public as a customer and also may go completely against the interest of the employees of this organisation."