AGAINST THE SINISTER MOVE TO DISINVEST ONGC

Established by the union government during 1956, ONGC was initially a Commission
which was declared as a Corporation during 1994 and was listed in SEBI in the name
of granting more autonomy. The trade union movement in ONGC especially the left
trade unions opposed the move terming it as a stubborn action of the government
to pave the way for its gradual privatization. It was basically the initial period of
introduction of the neo liberal economic policies in the country by the then Congress
Government against which the trade union movement in the country is still fighting
resolutely. We are passing through a period of unprecedented onslaught on the
working class and trade union movement of the country in general and public sector
workers in particular by the successive governments in the centre and the newly
installed corporate friendly BJP government under the leadership of Narendra Modi.
Over the period 1994 to 31st March 2014, Central Government has already divested
31.06% of ONGCs share and realized Rs.27,885 crores which is 81 times more than
what has been invested by the government in this sector. The present share holding
of government is 68.94% which the present government wants to further reduce to
63.94% through additional disinvestment of 5% share and thereby realize an
amount of Rs. 18,358 crores paving the way for ultimate privatization of this stand
alone E & P company.
ONGCs Contribution
ONGC being a public limited company during the course of 57 years of its existence
has paid Rs. 86,128 crores as dividend, Rs.3,85,041 crore to central exchequer and
Rs. 2,85,920 crore subsidy to oil marketing companies. Now the market
capitalization amount is Rs. 3,46,069 crore and the premiere company is having a
strong dedicated regular workforce of about 34,000 and secondary workforce of
another 20,000. ONGC is successful in establishing the record of Reserve
Replacement Ratio (RRR) of more than 1 consecutively for last 9 years. Te company
is in a position to make Rs.20,000 crore of profit after tax after paying subsidy
burden of around 56,000 crore to the oil marketing companies years after year.
ONGC has established hydrocarbon reservoir in the East Coast and Daman. As on
date ONGC operates with 72 on-land Drilling Rigs, 38 off-shore Rigs, 85 work-over
Rigs, 202 on-land installations, 240 off-shore installations, 23 seismic party, 79
logging units, 4 process installations and Institute / Centre of Excellences. It is
surprising that such a stand alone company is deliberately being put to sale which
undoubtedly is a move anti-national in nature and the atrocious manner to provide
easy passage to private sector to grab the national assets for a song is required to
be resolutely opposed by the working class.
Huge Contribution of Public Sector in our Economy
Today Public Sector is an inseparable part of the process and dynamics of economic
development in India. It is gloriously serving the nation for the past over six
decades by providing strong building blocks. It has been strengthening the financial
resources of the government for the investment in laying infrastructure and social
development. But since the adoption of the disastrous path of neo-liberalism under
imperialist globalization, public sector has been the victim of orchestrated
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vilification campaign negating the glorious role played by them in post

independence economic development of the country. Displaying strong immunity to
the global and economic slowdown, the public sector continued to show impressive
performance by maintaining the highest orders of governance and ethical practices.
Within a short span of time, many CPSUs have progressed to the status of
Maharatna and Navratna. During the year 2011-12, the turnover of all PSEs grew by
almost 23% to Rs.18,41,927 crore from Rs.14,98,018 crore in the previous year. Net
worth grew by 8.38% to Rs.7,77,812 crore from Rs.7,17,641 crore while net profit
grew by 5.84% to Rs.97,513 crore from Rs.92,128 crore. CPSUs contribution to the
central exchequer by way of dividend payment, interest on government loans and
payment of taxes and duties, increased to Rs.1,60,801 crore in 2011-12 from
Rs.1,56,751 crore in 2010-11. CPSUs have also been contributing substantially to
the countrys foreign exchange earnings, thereby enhancing the global image of the
country. During the year 2011-12, foreign exchange earnings of CPSUs increased to
Rs.1,24,492 crore from Rs.91,774 crore in 2010-11, showing a growth of 36%. This
is a reflection of their high creditworthiness and global competitiveness. For
instance, our ONGC is the topmost profit earning CPSE in the country its net profit
during 2012-13 being Rs.20,925.70 crores which is 15.50% of the net profit of
Rs.1,35,048.07 crore by all profit making CPSEs in the country.
Equally impressive is the fact that most of the CPSUs are debt free companies.
CPSUs are increasingly funding their expansion and investments from internal
resource generation, thereby reducing their dependence on government budgetary
support. For the FY2013 alone, the projected investment in ONGC was more than
Rs.40,000 crore. In the matter of debt-equity ratio, the score of public sector is far
far better than private sector. While in public sector debt component is very less
and in cases it is nil, in the case of private sector the debt component is very large
and equity component is very small. In TATA steel their equity is only 6% and Govt.
debt is more than 80%. Private sectors have around Rs. 5.40 lakh crores debt from
Govt banking sectors and most of the debt are now bad debt.
Disinvestment Onslaught during Last NDA Government
In the current context we may recall that although the policy onslaught on public
sector was launched by the Congress Government with Manmohan Singh as the
then Finance Minister the most atrocious attack on public sector came during the
last NDA Government. During the period from 2001-02 -2003-04 maximum number
of disinvestments either through strategic sales or an offer for sale route took place.
Amonst many other CPSUs BALCO, CMC Ltd., Hindustan Zinc Ltd., Hotel Corpn.s
three properties, Indian Petrochemicals Corp. Ltd., Jessop, Maruti Suzuki, Modern
Food Industries etc were divested through strategic sale route. However
subsequently during UPA-I Government under the pressure of Left Political Parties
from May, 2004, the Department of Disinvestment was abolished and became one
of the Departments under the Ministry of Finance. Disinvestment during this period
was almost nil. Thanks to the strong presence of Left forces in Parliament.
Disinvestment Drive of Modi Government

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The Finance Ministry has identified over a dozen public sector undertakings for
equity disinvestment during the remaining few months of the current financial year.
The Government has been aggressively working to mop up Rs.58,425 crore by
selling stake in PSUs. In the budget the Government estimated to collect Rs.43,425
crore from selling stake in PSUs and another Rs.15,000 crore from sale of residual
stake in previously divested PSUs. Arun Jaitley has said, our divestment programme
is progressing as per schedule. The process of disinvestment in ONGC , COAL and
NHPC among others has already been started. Government has decided to sell 5%
stake in SAIL and 10% stake in RINL (Vizag Steel Plant) and HAL in the current fiscal
besides an outright sale of TCI. Further the union Cabinet has already approved sale
of residual government equity in Hindustan Zinc and BALCO.

Energy Sector
Today the entire energy sector in the country power, coal & gas and petroleum are
under severe attack. In the oil & gas sector the government stake in ONGC, IOCL,
HPCL, BPCL, GAIL & OIL have already been reduced to 68.94%, 68.92%, 51.11%,
54.93%, 57.90% and 68.43% respectively. Government is determined to dilute them
further. Reliance, Adani like private business houses have been given entry in to
exploration of oil & natural gas through NELP and their stake in the sector is
increasing day by day. In the refinery sector private business houses already has a
big stake. The country is emerging as a refinery hub and refining capacity exceeds
the demand. The refining capacity has increased from a modest 62.240 Million
Metric Tonnes Per Annum (MMTPA) in 1998 to 215.066 MMTPA, comprising of 24
refineries. Of the 24 refineries, 19 are under the public sector, three under the
private sector and two in the Joint Venture (JV). The highest capacity of 33 MMTPA is
of RIL`s Jamnagar refinery (Domestic), which comes under the private sector. The
capacity of the RIL`s SEZ refinery and Essar`s Vadinar refinery stands at 27 MMTPA
and 20 MMTPA, respectively. In public sector refineries, the highest capacity is of
IOC`s Panipat and MRPL`s Mangalore refineries which stands at 15 MMTPA each.
The lowest is of IOCs Digboi refinery which stands at 0.65 MMTPA.
In power sector private participation is quite large. Through acquisition and merger,
Modi favorite Adani Group has already become largest private power utility in India
with installed capacity of 11040 MW after acquisition of Avantha Powers Korba West
Power Project in Chattisgarh. Adani Group Chairman Goutam Adani said in a
statement on 25th November last that this acquisition expands our footprint in
the coal mining belt and we are bullish about expanding our presence further. We
are committed to achieving our target of 20,000 Mw by 2020. Public Sector power
installations are also under the close scrutiny of the private players.
Government is out to effect massive disinvestment in Coal sectors. Coal block
allocation scam and thereafter through misinterpretation of the Honble Apex
Courts verdict, blocks have now been made open for allotment amongst private
owners not only for captive use but for even commercial mining. Heroic struggle of
coal workers against the move of disinvestment, private mining etc. is quite
encouraging and the workers and the trade union movement in petroleum and gas
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sector must take lessons from the same to voice their united protest against the
present move of the government to divest ONGCs share.
ONGC Cautions Government on Stake Sale
In a recent letter to the oil ministry ONGC flagged at least five issues and cautioned
the Government that without resolving those issues any divestment may not realize
the true potential or value of ONGCs stature. Without going into the ifs and buts of
the position taken by the ONGC management in conveying their views to the
Ministry, it is better to understand that no management can act more aggressively
against the decision of the Government. We should take advantage of the stand of
the management and immediately take all out initiative to go for campaign,
agitation and action unitedly to stop disinvestment equity in ONGC.
We must not forget that when the neo-liberal economic order was witnessing
unsustainable lop-sided economic growth, the government in chorus with private
big business was chanting suicidal slogans like government has no business in
business and dismantling and squeezing public sector through different derogatory
measures. It was also witnessed that when the neo-liberal path lost its creditability,
the government came out to rescue the private business houses through dolling out
of thousands of crore rupees in the name of bail-out package. The present
government too is following the same path more aggressively and is determined to
go for massive disinvestment of CPSUs.
The disastrous dimension of disinvestment must be kept in mind:

It is aimed at sabotaging the process of self-reliant development of our

country and welfare of the people in general set-in by the public sector
industrial network in the country and severely compromises national interests
as so it is anti-national.
It is aimed at handing over huge public assets and precious natural resources
at the command of the PSUs and also the control of the strategic and core
sector of the national economy to private hands, both domestic and foreign,
and that too at throw away prices; so it promotes corruption and loot on
public wealth and on the people and it is anti-people too.
It leads to severe onslaught on the rights and livelihood of the workers as is
already evident from the condition of the workers of the erstwhile PSUs
already privatized and so it is totally anti-worker too.
Disinvestment of shares of PSUs is an unscrupulous ploy to privatize in
phases and nothing else.

The very concept of disinvestment is a process of creeping privatization where

government as well as parliamentary control will get gradually reduced in steps
through induction of non-government directors and dictation of minority shareholders, especially the foreign institutional investors (FII). Fight against privatization
and disinvestments is thus the priority task before the public sector workers in
particular and trade union movement in general and there can not be any
compromise on this issue. It is under these circumstances, the trade union
movement in ONGC cutting across affiliations is to come forward for organizing
intensive movement to fight the onslaught of the government to save this premiere
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stand alone public sector company from the loot and plunder of the private business
houses. The trade unions in ONGC are duty bound to act firmly against the decision
of disinvestment and go up-to any length to defeat the move. Unity of the ONGC
workers both regular and contractor must be forged at any cost.

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