Why Vayalar Ravi must stick to Overseas Indian Affairs and not interfere with OMCs?

Written by: Sunil Fernandes

Why Vayalar Ravi must stick to Overseas Indian Affairs
Here are a few facts that Overseas Indian Affairs Minister Vayalar Ravi needs to know and a few suggestions as well after shooting his letter to Oil Minister Jaipal Reddy questioning the claims of oil companies that they are making huge losses (when they are actually making profits).

They are making losses?

According to a news report it is only after the assistance of Rs 83,500 crore from the Government and Rs 55,000 crore from the upstream oil companies ( ONGC, OIL and GAIL),  totaling Rs 1,38,500 crore, the three Public Sector OMCs (Indian oil, BPCL, HPCL) could declare nominal profits. Had this assistance not been given, the three OMCs would have reported a combined loss of Rs 1,32,000 crore.

After making profits they pay the government partially back through dividends

The Government of India being the largest shareholder in HPCL, BPCL and Indian Oil, receives large sums by way of dividends. So what if these PSU company make profits?

Creating world class assets

Oil Marketing Companies through ploughing back profits have created world class assets. BPCL has spent millions of dollars in operations abroad. The company today has exploration activities (or acquired blocks) in far flung countries including Brazil, East Timor, Australia and Mozambique. Till date, the company has acquired participating interests in 26 exploration blocks; in consortium with other companies. The company also has ship chartering, lubricants and petrochemicals business. Indian Oil has exploration blocks abroad and its overseas portfolio includes nine blocks spanning Libya, Iran, Gabon, Nigeria, Timor-Leste, Yemen and Venezuela.

Too much interference will create another Air India, MTNL, BSNL and Hindustan Cables

PSU OMCs have maximised shareholder wealth and this can be gauged from the dividends they pay and their respective share prices. Favouritism, nepotism, inefficiencies and ridiculous practices have plagued government companies like Air India, HMT, BSNL, MTNL, Hindustan Cables, Fertilizer Corporation of India etc.Political and bureaucratic interference would see the OMCs going the same way.

Please write to Pranab and Chief Ministers like Mamata to reduce excise and VAT on Petrol

Vayalar Ravi should write to Pranab Mukherjee to reduce the Rs 14 on Central Excise which the government collects on Petrol. He should write to State Chief Ministers like Mamata Banerjee to not only protest, but reduce the VAT on petrol prevalent in West Bengal, which would actually help to reduce petrol prices. Ditto for other Chief Ministers who have failed to reduce the VAT on petrol in their respective states. Everybody protects their own interests, so why not BPCL, HPCL and Indian Oil?

Was it a game of one up manship?

Was Ravi’s letter more a game of one up manship over A K Antony who is another politician from Kerala and had made a noise over the petrol price hike. In any case the Indian Overseas Affairs Minister has shown leftist leanings (problems with capitalism and profitability) and everyone knows why such leanings have wiped out industry from Kerala.


Read more about: hpcl, bpcl, indian oil
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