Facts, Not Comments

Deregulation of petrol and fuel prices which is in vogue in India has been only pinching the hapless citizens of the country as can be seen from the ever rising fuel prices defying any rational explanation in the prevailing crude oil prices scenario. But the other side of the picture is that there are some great beneficiaries also. They are the Oil Marketing Companies (OMCs).

In India there are 3 big OMCs in the public sector – IOCL, HPCL and BPCL and a host of private sector players.  In addition to pure marketing, these companies also refine and market oil that they buy from upstream oil exploration and production companies including from ONGC, Oil India, Reliance Industries etc. Their purchase price is directly related to international crude price. Thus lower prices are actually positive for oil marketing companies. OMC revenues will improve if oil price continues to fall as this results in reduction in the purchase price of crude oil, improved refining margins and improved marketing margins.

Have a look at the top-heavy structures of the three big 3 public sector OMCs with astronomical numbers of topmost executives.

IOCL has 82 EDs and133 CGMs! It registered a Profit After Tax (PAT) of Rs.20385 crores in FY 2016-17 with 64% increase over previous FY.

HPCL has 28 EDs and 59 CGMs! It showed a PAT of Rs.6209 crores in FY 2016-17 with 67% over previous fiscal.

BPCL has 27 EDs and 57 CGMs! It registered a PAT of Rs.8039 crores in FY 2016-17 with 14% increase over previous fiscal.

Not surprisingly, the staff cost of all these OMCs is colossal, consuming a sizeable portion of their expenses, since the pay, perquisites and post-retirement benefits of their executives, officers and employees are phenomenally exorbitant and go on increasing.  The fact is that OMCs are reaping huge profits, giving whopping returns to the Government and giving the best financial support, comforts, luxury and security to their employees, all at the cost of the poor citizens.

To say the least, deregulation of fuel prices was a decision which is far from rational. The nation looks forward to its reversal by the Government at the earliest, taking into account the miseries of the common man.