Home >Companies >News >ONGC piling up debt due to govt decisions, says union

Mumbai: The trade union body of the state-run Oil and Natural Gas Corporation (ONGC) has accused the government of “interfering with decision making and breaking the economic backbone of the company".

In a four-page letter written on 4 September addressed to Prime Minister Narendra Modi, ONGC’s Employees Mazdoor Sabha general secretary A R Tadvi said, “Decisions taken over the past four-and-a-half years have broken the economic backbone of the company. The employees union has given a notice period of three months to give ONGC a free hand to take its own decisions." Mint has a copy of the letter.

Questioning the government’s decision of forcing ONGC to acquire a gas block from Gujarat State Petroleum Corp (GSPC) for 8,000 crore, the union said it was a clear case of ONGC being brought in to bail out GSPC.

“During 2016, the government forced ONGC to acquire GSPC’s gas blocks in the Krishna Godavari basin for a total consideration of 8,000 crore… Even after GSPC spent large sums of money, hired foreign experts and imported sophisticated equipment, they could not find gas, then why was ONGC asked to pay 8,000 crore to acquire this block?," the letter read.

Accusing the government of funding its fiscal deficit by forcing ONGC to buy a stake in HPCL, the letter said, “The government asked ONGC to buy the government’s entire 51.11% stake in Hindustan Petroleum Corporation Ltd (HPCL) for 36,915 crore in an off-market deal, which was around 14% higher than the closing share price of HPCL for that day."

With this acquisition, the ONGC group’s debt rose to 1,11,533 crore in 2017-18 from 55,619 crore in 2016-17, the letter added.

Tadvi told Mint that constant interference by the government in ONGC’s business had led to curtailment of freedom of its chairman and managing director and directors’ decision-making process.

“Such is the financial instability of ONGC now that it has to raise an overdraft facility to make the payment for pay and allowances of its employees," Tadvi said, adding that ONGC had never seen such a situation since inception.

The letter also stated that the government had been exerting pressure on public sector undertakings to increase their corporate social responsibility (CSR) fundings on various projects, which otherwise should have been funded by the central government.

“The major projects conceived by the government -- LPG distribution, construction of toilets, adoption of villages for development, providing solar lights and distribution of sanitary napkins in girls’ school, to name a few -- are being funded by ONGC and similar public sector units, which leaves them with very little funds for the work concerned."

Questioning the appointment of Sambit Patra as an independent director of ONGC, the letter stated any further interference in the activities of ONGC would be counterproductive and a great loss to the nation as well as the exchequer.

“Further interference in the internal affairs of ONGC shall be condemned in the strongest possible manner, including resorting to any direct action as deemed fit by the Confederation of Trades Unions in ONGC, without giving any further notice."

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