Wednesday, January 21, 2009

Assam Tribune EDITORIAL: The Oil PSU strike: other side of the story

The Oil PSU strike: other side of the story— A. Krishnatreya (All of you please write a thanks letter to him at edit.tribune@gmail.com. Remember to thank those who tell the facts of both sides and blast those who hide one side of the story.)

During the recent strike by the Oil PSU employees, which badly hit the country’s economy and brought life to a grinding halt in many cities, it was natural for the people to censure the striking employees in the toughest words. This is because of the general perception that oil sector PSUs like ONGC, IOC, GAIL etc are already very highly paid and any further demand for better pay is unjustified. The media left no stone unturned in proving that the striking employees are getting much more than their due and the only way to address their grievances is to suspend them or take strict measures. Yes, it is true that a strike which can cripple the Indian economy is not justified, but why did such a strike have to take place at all? Has anyone presented the other side of the story?

The concept of the Public Sector Unit was visualised by some of our great leaders like Jawaharlal Nehru and Sardar Patel, to make the country self sufficient in certain key sectors like oil, coal and steel. The initial days were tough, when these new units, still in their infancy had to take on the global giants like Shell and Chevron. But as time passed and people gained experience, the experiment proved to be a success and many of the PSUs started making their presence felt not only in the country but also in global business. One among them is ONGC, which started off as a branch under the geological survey of India and in 50 years established itself as India’s most valuable company with assets in 16 countries. Did this happen out of the blue? Certainly not. It happened because of the consistent efforts by a group of highly qualified and dedicated engineers, geologists and executives. But after the collapse of the permit raj and the opening up of the Indian economy, private players came into the picture and the easiest way for them to hire quality manpower was to poach from the State run PSU s which already had a pool of well qualified and dedicated workforce. And this was quite an easy task, because the salary they offered was at least 5-6 times what a PSU employee was paid.

It is a common misconception that OIL PSU employees are overpaid for the job they do almost everyone seems to support this idea. But what they forget is that the OIL PSU officers are drawn from the cream of the engineering and science graduates. The entry criteria are very strict and the national level written tests needed to qualify can be compared to the civil services examinations. Moreover, officers employed through campus placements are also drawn from only the very best institutes. And where do these officers work? Well, the oil sector is a cruel world where there are hardly any white collared jobs, except perhaps at the top management level. So most of them work in fields located at remote areas or hundreds of Miles in the sea. Life is tough and every drop of oil is produced through the sweat of the engineers, quite literally. And at the end of the day how much are they paid? If we compare the gross annual emoluments of the Chairman and Managing Director (CMD) of ONGC and that of L&T the results are startling! The ONGC CMD gets around Rs. 13 lakh an annum whereas the top boss of L&T gets a staggering Rs. 5.85 crores. If this is the discrepancy at the top level, we can well guess what the situation is like at the lower or middle management level. On an average a private sector oil employee gets at least 5-6 times more than his PSU counterpart. And that too when many a time he is lesser qualified and poorly trained. No wonder that the attrition levels of the Oil PSU s are at a record high.

Another myth among the people is that PSU employees are casual about their work and unlike their private counterparts have little or no responsibility. It is very wrong to equate an Oil PSU employee with a government employee. A PSU employee may have a secure job, but he is certainly accountable for it and many of his variable remunerations are performance based. Targets are set and achieved in record time. Is this possible without hard work? The professional competence of PSU officers have been amply demonstrated in many instances. A glaring example is MRPL, the refinery set up by the AV Birla group as a joint venture in the mid nineties. The refinery was so badly managed that it seldom came into full production of 7MMTPA besides going into huge losses. Finally, unable to manage it, The AV Birla group sold off its stake to ONGC and in six months the debt of the refinery was reduced from Rs. 5500 crores to Rs. 188 crores and in less than 2 years the company started giving profits. At present, MRPL is not only producing at full capacity and earning huge profits but there are plans to increase its producing capacity. Does this not speak of the competence of Public sector Oil companies?

It is often said that privatising is the only sane option left for the Oil PSUs. But what people fail to see is that many of these PSUs are doing much better than their private counterparts. ONGC, for example, is India’s biggest Integrated Oil and Gas Company. Till recently it had the largest market capitalisation (recently overtaken by Reliance) and is India’s most valuable corporate. For the financial year 2007-08, it had a net profit of Rs. 19872 crores and paid a dividend of Rs. 6844 crores to the Indian government (the highest by any corporate). Not just that, it also shared a subsidy burden of Rs. 38500 crores of the downstream oil companies like IOC and BPCL so that the common man can keep buying petrol and diesel at highly subsidised rates. Private players like Reliance stopped selling petrol from their outlets simply because they were not prepared to bear the subsidy burden and so kept their prices high. The contentious issue of the pay commission report tabled by the Justice M.J.Rao committee has to be carefully looked into. It has to be borne in mind that unlike government employees who get central DA, the Oil PSU employees get a variable industrial DA which is substantially. Lower. Moreover, a government employee gets a pension which amounts to 50% of the last salary drawn, whereas a - PSU employee doesn’t have any such scheme. Besides, most of the engineers working in the fields have to work on shifts of 12 hours and in environments which are termed as hazardous whereas all government employees have a maximum 8 hour work per day in safe and secure work environments. So where does the parity between government and Oil PSUs come from? Finally, it needs to be remembered that the burden of paying the revised salary to the employees is to be borne by the PSUs, without any contribution from the government’s side. So why does it not have the independence to fix the pay of its own employees and have to be governed by the government pay commissions? It has been necessary to put all this on record because of the consistent manner in which oil PSUs have been maligned both by the government and the media over a strike which was necessitated by factors created solely by the government itself.

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