Oppose the Privatisation of the Oil Sector
A meeting to oppose privatisation of the oil sector was organised by Kamgar Ekta Committee on 26th October 2020. It was attended by leaders and activists from BPCL refinery at Cochin and Mumbai, Mangalore Refinery and Indian Oil Refinery in Assam and from the railways, primary, secondary school and college teachers and trade union and political activists.
Com Mathew, Secretary of KEC, in his welcome address, pointed out that public sector oil refinery workers kept refineries running during this corona crisis to ensure supply of petrol, diesel, LPG and kerosene in sufficient quantities to meet the country’s requirements. The government wants to privatise such a vital oil sector. The first target in this move is BPCL, the most profitable oil company. But BPCL workers have not accepted this and they have gone on All India strikes three times in the last one year – on 28th November 2019, 8th January 2020 and on 7th-8th September 2020. It is extremely important and a lesson to all other sectors that all unions of BPCL came together to oppose privatisation. The management was trying to victimise the workers in the most vicious way by cutting 8 days of salary for a 2-day strike. To build unity, oil workers organised 4 national conventions on 27th October 2019 in Mumbai, 20th November 2019 in Delhi, 22nd December 2019 in Kolkata and 9th February 2020 at Kochi. KEC was also invited to these conventions.
KEC salutes the unity of workers of BPCL for opposing this anti national, anti-worker policy of the government. It is a victory for the workers that the government has not been able to finalise the privatisation yet because of their continuous agitation.
The meeting began with a presentation by Com Ashok Kumar of KEC which outlined the current state of the Indian oil industry, its strategic importance, and the dominant role of the public sector oil companies which were all making substantial profits. He pointed out that privatisation is being carried out to help monopoly corporate houses such as Ambani to expand their business and profit. The pressure of American imperialists is also influencing the oil policy of the country.
The five invited speakers all appreciated the initiative taken by the KEC to build a common front of various public sectors workers against privatisation by holding sector-wise webinars every few weeks. They appreciated the presentation made by KEC. They all stressed that there was need for the workers of different sectors of the economy to support each other’s struggles and also to seek the support of people by making them aware of how harmful privatisation is for them.
Com. Nogen Chutia, General Secretary, Petroleum and Gas Workers Federation of India (PGWFI) gave a very informative and broad picture of the oil and gas industry in India and the different strategies adopted by the Central Government for privatisation of its different sectors (Please see Box 1 for the main points raised by Com. Nogen Chutia).
Com. Praveen Kumar, General Secretary, Cochin Refineries Employees Association (CREA- INTUC) spoke specifically about the privatisation of BPCL and how it would harm the people of this country (Please see Box 2 for the main points raised by Com. Praveen Kumar).
Com. M .G. Agi, General Secretary, Cochin Refinery Workers Association (CRWA- CITU) talked about how they went to the people of Kerala to enlist their support against privatisation. (Please see Box 3 for the main points raised by Com. M .G. Agi).
Com Kishore Nair, General Secretary, Bharat Petroleum Technical and Non- Technical Employees Association (BPTNTEA), Mumbai Refinery, said the unions in Koch and Mumbai have been fighting on all 3 fronts – political, legal and agitation. He said that KEC members supported their Long March on November 28th 2019, from the Refinery to Chembur where the KEC leaders had addressed and motivated them. He said to be honest BPCL employees in Mumbai are not used to the street struggle and he was thankful to KEC for guiding them in that.
He informed the meeting that the All India Refinery Unions have already organised 3 strikes and again given a notice for strike of 5 days. The management is trying to crush our struggle by taking punitive action against 35 office bearers of the Unions and we are fighting against that.
They are trying to force us into a wage settlement which has a clause that says that every 3 years they can change or review the settlement though it is supposed to be a 10 years settlement! They want to do this so that it is easier for them to sell BPCL. They are exploiting the unorganised workers and bringing down the workforce in the refinery.
He highlighted the anti-worker policy of the joint venture refinery of BPCL at Bina which has no workers at all. All work is handled by management staff and the workers are all outsourced or on contract. They want to bring this concept everywhere which is dangerous. This will be extended to other public sectors as well. Our unity is the need of the hour.
Com Sudhendu, General Secretary, Mangalore Refineries and Petrochemicals Ltd Employees Union (MEU) could not address the meeting due to connectivity constraints.
After these presentations, there was a lively interaction with the participants. One participant pointed out that even now common people prefer to go to public sector petrol pump outlets and not Reliance petrol pumps. Others said that we have to go to the people and make them aware of the anti-people and anti-national policies of the government. It was also pointed out that in spite of the prices of crude oil falling internationally, the government did not pass on the benefits to people. It instead levied extra tax to keep prices un-changed. The government is squeezing the people every year and earning more than Rs. 6 lakh crores as taxes from petroleum products. Several participants wondered where all this money is going, and why it was not used to build new hospitals for Corona, or provide relief to the 20 crore migrant workers who walked back to their homes.
The meeting ended with the decision to work to a) get the support of other trade unions, peoples and student organisations and political parties in the struggle against privatisation, b) carry out a mass campaign to educate the public and c) build the unity of all public sector unions fighting against privatisation.
KEC announced that it is bringing out a leaflet against privatisation of public services and called on all the participating trade unions and other organisations to be signatories to the leaflet.
Highlight of the address to the meeting by Com Nogen, General Secretary of Petroleum and Gas Workers Federation of India (PGWFI) at the National Webinar Organised by Kamgar Ekta Committee on “Oppose Privatisation of Oil Sector”
The privatisation of the petroleum sector started in India in 1997 with ONGC, under the NELP (New Exploration Licensing Policy). Twelve rounds of bidding and twelve rounds of privatisation of oil fields were carried out till 2012, with 257 oil fields being handed over. Since the NDA came to power, it started a new policy of selling off “the marginal oil fields” under the OALP (Open Acreage Licensing Policy). Nine rounds of bidding have been completed and more than 90 oil fields have been given off, mostly to private parties. Anil Agarwal has acquired about 51 oil fields. Under OALP, many conditions with respect to bidding, pricing, payment of cess and royalties have been relaxed. Safety is also an issue of concern. Three employees died in a fire this year in May in Baghjan, Assam because the company did not follow any safety rules at all.
Shares of public sector oil companies were first distributed to employees in 1998-99, and then offered for sale in the market. Today the government’s share of the equity is only around 53% in BPCL, 5455%in IOC, 63% in ONGC, and 68 % in Oil India. The intention is to bring the government shareholding in oil companies below 50%. The intent is for private monopolies to have infrastructure control, administrative control, and control over the appointment of Directors and Chairmen and the government is speeding up this process.
ONGC, one of the biggest oil companies in India, was formed in 1956 and expanded rapidly. All oil fields like Bombay High, Heera and Panna Mukta were discovered by Indian experts. ONGC embarked on exploration jobs world-wide in the 1990’s. This behemoth has now become extremely sick, with only Rs.171 crores of cash in hand; its working capital is negative and market capital is also low and way below the standard norms. Why? The government forced ONGC to buy HPCL for which it had to take a loan of Rs. 25,000 crores from private banks!
The Gujarat Petroleum Corporation Limited (GPCL), a state enterprise established in 2005, took a loan of Rs. 19,000 crores from the bank, claiming that it would make up for the shortage of gas through its exploration. But the company became bankrupt within a few years. It is incapable of producing a single drop of crude oil and natural gas now. Last year the Indian government forced ONGC to take a major share of GPCL amounting to Rs. 7,738 crores. ONGC has been constrained by such financial burden to cease many activities abroad. Its annual production has come down from 38 to 35 million tonnes and share value from over Rs. 500 to below Rs.100!
The government is pushing the public sector company into a loss making enterprise so that it can be sold to some private monopoly.
Last year, BPCL, a very profitable company, made a net profit after tax of around Rs. 7,100 crores. When the government decided to sell BPCL, it declared that no public sector company would be allowed to participate in the process, though Indian Oil and others have the capacity to do so.
It is likely that BPCL will be sold to RIL of Ambani. Ambani has a refinery at Jamnagar which is 63 million tonnes and is expanding. RIL does not have sufficient marketing network in India but if BPCL is sold to it, it will get 15,087 retail outlets in a single day, besides 54 LPG plants, 56 aviation centres, 2,100 km product pipeline and so much land!
The last date for selling has been extended to 16th November 2020. If we could establish a strong and militant trade union movement in the oil sector in BPCL then definitely the private party will hesitate to enter. After the workers of the public sector Coal Indian Ltd, launched a 3 day strike in July this year against selling to a private company, not a single tender has been submitted by any national or foreign party till date. The Unions had mobilised all the workers and the local people staying around the coal fields as well. They organised so many programs.
When the workers and engineers of the Uttar Pradesh Electricity Board started a strike against privatisation a few days back, they defeated the plans of the CM!
In the defence sector, workers served a strike notice and were on an indefinite strike from 12th Oct 2020. The Labour Department and the Government had to halt privatisation while the conciliation process was on.
This is the only weapon for workers to stop privatisation. Success is definite. If we unitedly fight, the workers will surely win.
The sovereignty, safety and security of our country depends on electricity, coal and petroleum that constitute the energy sector. 60% of the country’s fuel dependency is on petroleum products. Private oil companies will neither subsidise LPG nor supply in remote inaccessible places because it would not be profitable.
Everybody knows the future of the petroleum sector is bright in India and hence they want to capture it.
The total value of BPCL is about 9.5 lakh crores but the government has fixed its wholesale price at 1 lakh crore! ONGC has a profit record of Rs. 20,000 crores after tax and Indian Oil of more than Rs. 15,000 crores. The IOC, ONGC, BPCL, HPCL, Oil India are contributing about Rs. 6 lakh crore per annum to the national exchequer!
After privatisation, Reliance refinery in Jamnagar, Gujarat was given a tax holiday for 10 years. Even now they have an export processing zone where out of their total 63 MMTPA capacity, 28 MMTPA is exempted from any tax! But the public sector units pay regular taxes and dividends. After privatization the government will impose more taxes on people to make up for the shortfall in revenue.
Extract from the speech by Praveen Kumar, General Secretary of Cochin Refineries Employees Association-(CREA-INTUC) at the National Webinar Organised by Kamgar Ekta Committee on 26th October 2020 – “Oppose Privatisation of Oil Sector”
BPCL has been in the fortune 500 list for the past 16 years. Last year BPCL has contributed Rs 94,000 crore as tax to Central and State governments. As per the present share value the government can expect Rs 64,000 crores from the sale of BPCL.
It is often portrayed in the media that public sector companies are a burden on the government into which people’s money is sunk. This is wrong. India is in a leading position in the world because public sector companies have fulfilled their role. Now the Government is trying to privatise 53% of shares of BPCL by selling it to some private parties.
The government had attempted to privatise BPCL and HPCL as well in 2001. At that time, the laws were against this and posed considerable limitations. One statement made by the petroleum minister was that “The government has no business to be in business”. But the real problem is that the government considers all this to be a business when it is not. It is part of the development of the country.
Instead of measuring the profit that a public school or hospital makes, what must be recognised is that it is contributing to building a future generation and civilised citizens of the country. That is the only profit. But unfortunately, that is not the thinking of the rulers which is why they are trying to sell the companies.
None of the private refineries is producing great quantities of LPG because it is the least economical product made by any refinery. So, companies like Reliance are trying to make more value added products from LPG. Because of social commitment alone companies like BPCL are producing huge quantities of LPG which is why their profit is less than that of private players. Such a commitment will not be there if the refineries are handed over to a private party.
By privatising BPCL and HPCL, sustainability of oil PSUs will suffer. BPCL has a huge network of retail outlets (more than 15,000). And as a brand, it is highly valued by people of the country. Most people want to purchase fuel from a public sector company because they trust them.
Our relations with neighbouring countries are tense; there is a constant threat at our borders. In the present situation if the government concedes control of the oil sector to private Indian and foreign companies, it is a threat to our national security.
In a country like India, the demand for fossil fuels will increase in the market. But in the developed countries of the world they are looking at other alternatives like electric power. The oil corporates of the world want to sell their entire crude stock in a limited time to a large area which is why they are targeting countries like India. This may be the driving force for such policies of the Central Government.
The employees have been protesting against the sale of BPCL. They know what profits are being made. Without any assistance or aid from the government these public sector oil companies are making profits and contributing their share to the government as well. By taking this decision the government is actually killing the goose that lays the golden eggs. BPCL management and workers have fulfilled their responsibility successfully by making all the people of the country, the political parties and trade union leaders aware about the looting going on behind the privatisation of BPCL.
The survival of existing employees will not be difficult because they are highly skilled, competent and educated people even in the labour category. Such skilled manpower cannot be achieved at a cheaper rate in any company. But it’s not just about the money. There is an issue of social commitment which the management and workers have done their best to make people aware of.
The government has extended the date for submission of expression of interest to purchase BPCL for the 4th time. The agitation by the employees and workers is one reason for this.
There are similar difficulties in every sector like banking, railways, agriculture, telecom, etc. Government policies are against the workers. Every sector is isolated. We need to come together and forge a joint movement. We cannot afford to think that we can change the privatisation drive of the government by fighting alone. Our success lies in all of us – workers and peasants – joining hands.
Speech by Com M. G. Agi, General Secretary, Cochin Refinery Workers Union (CRWU- CITU) at the National Webinar Organised by Kamgar Ekta Committee on “Oppose Privatisation of Oil Sector”
The Niti Aayog has asked different ministries to recommend the names of the public enterprises in various sectors which can be considered for wholesale strategic sale where both ownership and control will be transferred.
The disinvestment of BPCL or IOCL is dangerous as some foreign company can get a monopoly hold of the entire retail market. We should not forget that during the 1971 war, private oil companies had refused to supply oil to the Indian military.
Public Sector oil companies are called upon by the government to subsidise consumers in the wake of a surge in import prices of oil. Mega social schemes like Ujjwala have been possible because of companies in the public sector.
Private sector will be a profit making machine without any concern for workers and will be interested in minimum labour and maximum output. Hence huge losses to the workers are guaranteed. The private sector is notorious for serious violation of minimum wages, unsafe working conditions etc. As per the Business Standard report dated 14th Dec 2018, of 85 firms that were raided in Delhi 79 were found to be violating minimum wages statute. If this is happening in our capital itself we can assume the pathetic condition of labour in the private sector elsewhere in the country. It is important to maintain the standard of minimum wages. But with the disinvestment this will become a distant dream.
The rulers claim that they want to create a free market economy. But what kind of free market economy is being created with all our resources in the control of a handful of people?
It is also a complete lie that PSU’s are not competitive. Saudi Aramco , National Iranian Oil Company, CNBC, Kuwait Petroleum are the world’s biggest State owned companies. With more autonomy and suitable policy changes, PSU’s can do much better.
Actually 50% of the sick public sector companies are those that the Government took over after the private capitalists had made them sick. But these private monopolies are never punished. In 2018-19, the total value addition of Central Public Centre Enterprises (CPSE) was Rs 5,60,310 crore . Out of this, 27.26% goes towards salary and wages and 38.07% is realised as profit before tax. But in the case of Reliance, out of total value addition the salary and wages is 7%. That is the main difference in public and private sector. In the case of Bharat Petroleum Corporation, 11% goes to salary and wages.
Before the decision of disinvestment of BPCL was formally announced, we in Cochin Refineries already started protest activities against the privatisation from September 2019 onwards. On 15th October 2019, we conducted a rally in Thripunithura, Ernakulum where we proclaimed to the people that the Central Government was soon going to privatise BPCL. We staged a dharna in front of Kochi Refinery from 17th October 2019 onwards and it continued till the lockdown restrictions came on 24th March 2020. Trade unions began their dharna on 5th November 2019 and MP’s and MLA’s joined on 12th November 2019. CPM Ernakulum Zilla District Committee conducted a protest program on 22nd November 2019 and the DYFI organised a long march from ship yard to Kochi Refinery on 5th December 2019. Several protest activities have taken place in front of Kochi Refinery.
We would like to conduct such local meetings and discussions to form a joint movement of workers and common people against the privatisation of public sector enterprises.