Deora tells oil firms to up social spends- Milching Cows- the Oil Sector

Deora tells oil firms to up social spends.

Just see what else Politicians do with PSUs! This will throw further light on why Govt does not want to give full independence to OIL PSUs.

Economy Bureau Posted: 2009-02-03 01:13:27+05:30 IST
Updated: Feb 03, 2009 at 0113 hrs IST

Mumbai: In an interesting development barely days before notification of the general elections scheduled for April-May—and imposition of the model code of conduct—the government has told state-run oil marketing companies to increase threefold their spending on corporate social responsibility (CSR) activities. The decision was taken at a meeting chaired by petroleum minister Murli Deora with the heads of these PSUs in Mumbai on Monday. “More money will be available for CSR activities from these companies. This will definitely help improve the quality of life of the people in the vicinity of major units and installations of these companies,” Deora told FE.

Retailers Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation, together with exploration & production major ONGC and Oil India Ltd, gas transporter GAIL India and Engineers India must now allocate 2% of their profit after tax (PAT), from the present 1% on CSR activities.

However, the decision to raise CSR spends comes at a time when the profitability of several of these companies are under strain thanks to rising subsidy burdens and crude oil price fluctuations. ONGC’s Q3 net slipped 43% to Rs 2,475 crore, against Rs 4,367 crore in the corresponding period of the previous year. Similarly, HPCL’s net losses mounted to Rs 422 crore, compared with Rs 15.74 crore. In financial year 2007-08, the PAT for these companies amounted to Rs 31,236.04 crore, of which Rs 222.31 crore was allocated to CSR. Under the revised 2% norm, they are expected to collectively shell out around Rs 650 crore.

Analysts, though, said while the CSR initiative is noble, the companies and their shareholders would have been better served if these funds were ploughed back into growth plans. Petroleum secretary RS Pande, who was also present at the meeting, said, “As there are practically two months remaining in the current fiscal, today’s decision will be effective from financial year 2009-10. Within a month, these companies will get approval from their boards of directors. The boards, whenever necessary, will also review the CSR activities.”

Pande said any allocated money that is left unspent during the fiscal would be carried over into the next year. These companies have already touched the lives lakhs of people by supporting social, cultural, educational and environmental initiatives with a focus on partnering communities in health, family welfare, education, environment protection, provision of clean drinking water, sanitation and empowerment of women and other marginalised groups. GAIL India had already decided to double its budget allocation to 2% for CSR activities in 2009-10. CMD UD Choubey said, “The company has already spent Rs 27.09 crore against the budgeted expenditure of Rs 26 crore for 2008-09.”

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