There has been a lot of uproar in recent times on the oil marketing PSUs. HPCL, BPCL and IOC, the 3 major PSU aren’t doing well. Under recoveries, sale of petroleum and its products at lower prices has affected theses companies. Rise in international crude prices, mounting losses and reduction in compensation from government during this fiscal (mentioned in budget), the future for these companies looks bleak.
The pressure of a coalition government has taken a toll on these companies as they have not been able to increase the prices and reduce their losses. Making profits is out of scenario. What is the option left for these PSUs? Report regularly on losses and expect government to compensate them in form of subsidies and bonds. This isn’t a long term solution.
The solution, the government has now is to go for a restructuring plan and merge these 3 oil giants in to one single entity. If possible they could also consider the idea of merging ONGC with these companies in to one single PSU. Merger will really help these companies and would do them a world of good.
I mean see it for yourself. You will find an IOC pump and next to it/100 metres ahead; you will find BPCL/ HPCL pump. What’s the use of having these pumps next to each other, competing among themselves when the owner for them is the same- the government. The main aim is to provide fuel supply, then why is there competition among them? This question needs to be seriously addressed.
Merger will help these companies reduce their cost in terms of multiple outlets in one single area, wasteful expenditure on advertisement, marketing and other activities. These companies can consolidate and improve infrastructure nationwide through cross country pipelines, refineries, tankages, filling station and so on. It will save huge amount of costs and tax payers money. Also the capacity of the merged entity will be enhanced and can match those of private sector companies and be a market leader in this sector.
High oil prices and non availability of excise credit has taken a toll on these companies individually. Time is not far when Oil sector will be the next aviation sector.
Looks like the infectious disease of negative net worth of airlines sector is spreading quickly to the oil sector. Increasing subsidies and bonds will not help this sector to last lifelong. The best the government can do is to merge and unite them as one single entity. Phrase which is very old is apt for this industry- United we stand, divided we fall.
“Hope is like a cloud but it comes true when it rains”. Hope that the government will take steps to save the 3PSU giants by merging them into a single entity at the earliest.
No comments:
Post a Comment