Not too long ago, India’s largest crude oil and natural gas exploration company — the Oil and Natural Gas Corporation (ONGC), owned by the Government of India — was not only debt-free, but the country’s most profitable company. It was also among one of the most cash-rich companies in the country.

This has changed. After successive governments had gradually milked ONGC, the oil & gas explorer has completely run dry after the Narendra Modi government took over.

ONGC — a central public sector enterprise developed in the late 1950s and 1960s — is key to India’s energy security.

Of course, the Congress regimes since the early 1990s began chipping away at the central public sector enterprise in favour of private businesses looking to dig into the inordinately profitable oil and gas industry.

In 1992-93, a total of 28 prime oil and gas fields that were discovered and developed by ONGC were given away to private parties for a pittance.

In fact, the Indian government in 1991 forced ONGC to take a loan of $450 million from the World Bank with attached conditions mandating that the oil fields discovered by ONGC and Oil India, another state-owned enterprise, would have to be developed as joint ventures with private and foreign capital.

But ONGC remained among the top cash-rich companies of India — contributing around 70% to India’s domestic production.

Over the past four years, however — as the Bharatiya Janata Party-led National Democratic Alliance regime under Narendra Modi has continued to suck out cash from profitable public-sector companies in ‘inventive’ ways — ONGC has not only exhausted its accumulated cash reserves, but is now under a mountain of debt, thanks to unnecessary acquisitions that it was forced to make by this government.

Last November, the Oil Ministry had been pushing to sell 60% stake in prime oil and gas producing fields of ONGC to private companies, but the attempt was unsuccessful owing to strong opposition from the state-run company.

But before we look at the various ways that the Modi government employed to drag down ONGC, let us take a brief look at the company’s financials as reflected in its yearly balance sheets (which can accessed inside its annual reports) for the past four fiscals.

The financials tell the story of ONGC’s downhill slide — engineered by the Modi government — which is not just sorry but scary for India’s energy future.

What The Financials Say
This June, Bloomberg had reported that ONGC’s cash levels in the year ended March 2018 (FY 2017-18) were at their lowest since the year ended March 2001 (FY 2000-01) — and had dropped by more than 90% in one year from FY17 to FY18.
Indeed, a look at the balance sheets corroborates this.

Below we have the cash with ONGC (counted here as Cash & Cash Equivalents + Other Bank Balances + Current Financial Investments) over the past five years — from FY2013-14 to FY2017-18.  

We can see that in FY2015 — the first fiscal after Modi came to power in mid-2014 — there was a fall of around 74% in the cash levels from the year before. Cash reserves are used for capital expenditure, which is massive for oil and gas companies undertaking exploration of hydrocarbon reserves. Cash reserves are also used for paying the annual dividends — a share of the profit earned by a company paid to its shareholders.

This is the same year, 2014-2015, when ONGC was overtaken by Mukesh Ambani’s Reliance Industries as India’s most profitable company. ONGC had posted a consolidated net profit of Rs 18,334 crore that year, and it slipped to the third position.

There was recovery in the cash levels in FY2016 and FY2017.

However — from 2016-17 to 2017-18 — the company’s cash levels dropped steeply, by 92%.

There are a number of reasons why this has happened.

Dividend Payouts
ONGC has been among the highest dividend-paying public-sector companies. But the government has been treating it as a cash cow — and has been regularly extracting extra or ‘special’ dividends from the company, just as it does from other profitable public sector companies, especially oil and gas companies.

In 2013-14, ONGC paid a total dividend of Rs 81.3 billion (Rs 81,2771.70 lakh). Again, in 2014-15, the company paid a total dividend of Rs 81.3 billion (Rs 81,2771.55 lakh).

In 2015-16, ONGC had a dividend payout of Rs 72.7 billion (Rs 72,7216.6 lakh). In 2016-17, the company paid a dividend of Rs 77.6 billion (Rs 77,6410.7 lakh).

However, in 2017-18, ONGC paid its highest dividend ever of Rs 84.7 billion (Rs 8,470 crore). All of these dividends mentioned here are without counting the dividend distribution tax paid.

Fuel Subsidy
What’s more, ONGC and other state-owned oil companies, such as Oil India Limited (OIL), have been regularly asked to share the fuel subsidy burden, with the government refusing to pay the entire subsidy. So, ONGC had to pay for fuel subsidy — selling oil to refiners at a discount —  as oil prices soared. This obviously cut into the profitability of the company.

In 2014, the public sector explorer was asked to pay a record subsidy of Rs. 56,384 crore (Rs 563.84 billion), an increase of 14% from the subsidy paid the previous fiscal, so that state-owned fuel retailers could cover the losses incurred in 2013-14.

For just the quarter ended December 31, 2014, the company was asked to pay Rs 8,716 crore. In June 2015, ONGC and OIL had both made contributions of over 40% of the annual subsidy bill.

The government had again been asking ONGC to bear the fuel subsidy this time to bring down petrol prices, but the company resisted and was exempted — given its dire financial situation, with ONGC chairman Shashi Shanker admitting in June this year that the company was “already in the red.”

But how did ONGC end up “in the red”?

While the high dividend payouts and fuel subsidies can explain the fall in ONGC’s cash and profitability in the 2014-15 fiscal, what happened in FY2017-18 that the cash levels fell by 92% — from over Rs 130 billion to around Rs 10 billion?

This is where we come to the two most destructive moves by the Modi government as far as ONGC’s cash situation as well as its future is concerned — getting ONGC to bail out the debt-ridden Gujarat State Petroleum Corporation (GSPC) and to buy the central government’s stake in the Hindustan Petroleum Corporation Limited (HPCL).

Bailing out debt-ridden GSPC
In August 2017, ONGC was made to acquire all of the 80% stake of Gujarat State Petroleum Corporation Limited (GSPCL), owned by the Gujarat government, in a gas block of the Krishna Godavarari (KG) basin — the KG-OSN-2003/1 DDU (Rajamundry off shore in Bay of Bengal) field — for nearly Rs 8,000 crore (Rs 80 billion).

For this, ONGC paid around Rs 74.8 billion in FY 2017-18, according to its website.

The field was auctioned during 2003 under the erstwhile New Exploration Licensing Policy (NELP), which has now been replaced by the Hyrdrocarbon Exploration and Licensing Policy (HELP) approved in March 2016. In 2005, the GSPCL claimed that the KG-OSN-2003/1 field was the discovery of the century for India.

However, the block did not see any commercial production by late 2015 since the time it was discovered. GSPCL has debt of Rs 19,576 crore, for which they paid interest of Rs 1,804.06 crore per year.

So, buying the block from GSPCL is nothing but a losing proposition for ONGC.

Buying HPCL After Taking Debt
In January 2018, ONGC was forced to acquire the central government’s entire 51.11% equity stake in Hindustan Petroleum Corporation Limited (HPCL) — only so that the Modi government could meet its fiscal deficit target.

In fact, ONGC was forced to buy the HPCL stake for Rs 36,915 crore (Rs 369 billion) — at a price that was 14% higher than the market rate, HPCL’s closing share price, on January 31, 2018.

Most devastatingly, this deal pushed ONGC into high debt — ONGC was compelled to borrow Rs 35,000 crore (Rs 350 billion).

ONGC borrowed this sum as short-term (one-year) loans from four public sector banks and three private banks — Rs 7,340 crore from State Bank of India; Rs 4,460 crore from Bank of India; Rs 10,600 crore from Punjab National Bank; Rs 1,600 crore from Export–Import Bank of India; Rs 4,000 core from HDFC Bank; Rs 4,000 crore from ICICI Bank; and Rs 3,000 crore from AXIS Bank.

As per ONGC’s balance sheet for FY 2017-18, the company has borrowings of Rs 255,922.08 million (Rs 25,592.2 crore).

Selling Stake To Pay Off Debt
Speaking to Newsclick on condition of anonymity, an ONGC official and member of the ONGC Workers’ Union said the company was planning to raise money to pay off its debt by selling its shares in the state-owned Indian Oil Corporation (IOC) and GAIL.

ONGC has 13.77% shares in IOC and 4.86% shares in GAIL that were purchased under the Government of India’s buyback policy earlier.

The official said ONGC was planning to sell the IOC and GAIL stakes to the state-owned Life Insurance Corporation of India (LIC).

“But LIC put a condition that it would only buy the stakes at a concession of 10% as compared to the market rate. But ONGC refused this and decided to sell in the market instead, even though we won’t realise the amount in one shot if we sell in the market. Currently, there are some technical problems that we are dealing with for selling in the market. So the sale is yet to happen,” he said.

He said, that in fact “the management was planning to sell off ONGC’s stake in OPAL (ONGC Petro Addition Ltd), a new joint venture in Gujarat. But the employees’ union opposed the sale and requested the management to instead sell IOC and GAIL stake.”

Given the extremely capital-intensive and high-risk nature of oil exploration activities, the current situation is extremely dangerous for ONGC’s future. In any case, cash reserves are required for capital expenditure — which is critical for oil and gas companies to invest in exploration and production.

As Bloomberg says, ONGC has started work on its largest-ever oil and gas exploration project, which will require investments of more than $5 billion over about four years.

Recently, the Modi government held the first auction of oil and gas exploration blocks in the country in eight years, under the new and ‘liberalised’ Open Acreage Licensing Policy (OALP), and awarded 41 blocks out of 55 to Anil Agarwal’s Vedanta Resources. ONGC was given just two blocks. The ostensible reason that was reported in newspapers was that the bids made by ONGC were “conservative” and showed “extraordinary risk-aversion.”

Given the state ONGC has been reduced to by the government, is it any wonder that the country’s largest crude oil and gas company is being risk-averse?

“ONGC had been a debt-free company since 2001-02. The cash reserves can be built up again,” said the ONGC official to Newsclick, “but the company needs to become debt-free first.”

Union in Gujarat Writes to Modi
Meanwhile, in a letter dated September 4, 2018, the ONGC Employees’ Mazdoor Sabha in Gujarat wrote to PM Modi, raising the issues of the GSPC and HPCL deals, and stating that “constant interference” by the government had turned ONGC from a “cash rich company to a high debt company.” ONGC officials have also asked the government to exempt the company from the share buyback plan.

Giving a notice of three months for the Modi government to stop interfering in ONGC’s decision-making, the union in its letter has warned of “resorting to any direct action, as deemed fit, by the Confederation of Trade Unions in ONGC, without giving any further notice.”

Courtesy: Newsclick.in

Newsclick Image By Nitesh
 

The personal data of Indians is being leaked to all and sundry. And when the ruling political party is itself collecting and sending the data of unsuspecting citizens to foreign companies — as revealed by a French cyber security researcher on 23 March — little remedy can be expected.

At least two separate fact-checks, by AltNews and NDTV , confirmed that the official Narendra Modi Android application — popularly known as the NaMo App — sends users’ personal information to a third-party domain (in.wzrkt.com) owned by American company CleverTap, which helps marketers “identify, engage and retain users.” All of this without consent, of course.

The BJP responded by saying that data was being used only for analytics using third-party service, “similar to Google analytics”, in order to provide “contextual content”.

The NaMo app scam has come in the backdrop of the recent Cambridge Analytica expose which showed how the UK firm harvested Facebook data to target ‘psychographic’ advertising in the Trump campaign.

It also came to light that the Facebook app has been logging the history of people’s calls and text messages without their permission. Facebook responded to these reports with a blog post denying that the company surreptitiously collected call data, and clarifying that it never sells the data.
Quite apart from the NaMo app data being sent to a third party which could misuse it, consider this: now the BJP has in its possession 50 lakh users’ private data (acquired without their consent by the NaMo app) which it can analyse and use in whatever way it wants – from setting up their famed panna pramukhs and booth management system to targeting dissenters or others.

A day after the exposé, the privacy policy on the Prime Minister Narendra Modi’s website was quietly changed . Earlier, the privacy policy had lied that the users’ “personal information and contact details shall remain confidential” and that it “shall not be provided to third parties in any manner whatsoever without your consent”.

After the whole scandal broke open, it has been changed to say that “certain information may be processed by third party services” to offer “the most contextual content”, give “a unique, personalized experience according to your interests”, show “content in your own language”, etc.

The NaMo app gets access to 22 data points on your phone — including camera, microphone, photographs, location, contacts, etc. Compare this to the official app of the Prime Minister’s Office (PMO India App), which asks users for access to 14 data points.   

Reports have emerged that recently, around 13 lakh students enrolled in the National Cadet Corps (NCC) have been asked to install the NaMo app on their smartphones “ahead of a planned interaction with the prime minister soon”. Their mobile numbers and email IDs were also collected. So, the govt.’s invisible hand is firmly guiding people – including youngsters – to unknowingly become data providers to the BJP.

Earlier, the same French researcher — whose name, reportedly, is Robert Baptiste but who goes by the pseudonym of Elliot Alderson on Twitter — had been highlighting security loopholes and vulnerabilities in the infrastructure of Aadhaar — the biometrics-linked Unique Identification number project. The numerous data breaches enabled by the Aadhaar infrastructure in the past are no secret.

Besides, the NaMo app revelations come in the wake of the controversy involving Facebook and Cambridge Analytica, a British analytics and political consultancy firm that reportedly harvested data of around 50 million Americans to influence the US election results. There were allegations that it may have meddled in Indian elections as well, as BJP and the Congress had reportedly used the services of a partner Company named Ovleno Business Intelligence.

Even after the NaMo app revelations, the Congress and the BJP had an accusatory exchange, after Elliot Alderson revealed that when a person applied for membership in the official INCIndia app, the personal data was sent to a server located in Singapore. However, the privacy policy of the Congress app does clarify that information may be shared with third parties for various purposes.

Recently an RTI reply revealed that “a private vendor previously employed by the ministry of defence may have walked away with the personal data of 50 lakh ex-servicemen,” reported the website Janta Ka Reporter.

“The reply by the MoD, headed by Nirmala Sitharaman, raises several worrying questions in light of the latest reports of Facebook letting users’ data get compromised from its platform,” the report said.

Courtesy: Newsclick.in

For the fourth time, the BJP-led NDA government is trying to turn the productive workforce of the country into an army of casual workers. 

The Union Ministry of Labour & Employment has issued a notification with draft rules introducing “fixed term employment” across sectors. 

This means all businesses are allowed to hire workers on a fixed-term contract basis — even as workers across industries have been demanding an end to contract labour and are demanding regularisation of jobs. 

All central trade unions in India have been consistently opposed to the moves towards contractualisation and casualisation of workers. 

The draft rules make it clear that employers are not required to give notice of termination of employment for fixed-term workers, nor do employers owe any retrenchment pay to such workers. In other words, workers can be hired and fired without notice.  

It makes little difference then for the rules to say, as they do, that fixed-term workers are entitled to the same hours of work, wages and other benefits as that of permanent workers. 

In fact, the provision mandating that only a fixed-term worker who has served for three consecutive months is entitled to a two weeks’ notice (and in absence of notice, will be informed of the reason for retrenchment in writing) indicates how short a term of employment even the government envisions for the workers if these changes are introduced.

The NDA had first introduced hiring of fixed-term contract workers in 2003, but the UPA government in 2007 had reversed the order, owing to massive unanimous opposition from all the central trade unions. 

Then in 2015, the NDA again issued draft rules for the same purpose, but the proposal was shelved again following protests from trade unions. 

In October 2016, the NDA introduced fixed-term employment in the apparel manufacturing sector, despite the continuing stiff opposition. The government had tried to justify it saying that work in the apparel sector was seasonal in nature.

Now, on 8 January 2018, the labour ministry again issued the draft notification meant to amend the Industrial Employment (Standing Orders) Central Rules 1946. The notification has been uploaded on the ministry’s website for comments till 9 February 2018.On 10 January 2018, the Centre of Indian Trade Unions (CITU) wrote a letter to the labour ministry, urging the government to drop this incredibly anti-worker proposal.

“Have all jobs in all industrial sectors turned “seasonal”?” asked the letter by Tapan Sen, general secretary of CITU, referring to the ministry’s earlier justification for introducing fixed-term contracts in the apparel sector.

“It is a grossly anti-worker measure designed to temporarise and casualise the workforce to serve the interests of the employers’ class,” Sen said.

“Extending same wages and service conditions as regular workers to fix-term employees as mentioned in the notification does not mean anything since the very temporary character of employment and accompanying fragility in job security will not allow such temporary employees to demand such equal treatment simply out of fear of losing employment.”

The notification is a “design to gradually replace the regular workforce in industries by temporary workers, totally deprived of all rights and hence cannot be accepted,” the letter said. 

It has been reported that there was pressure from various quarters of industry to bring back the proposal allowing flexibility in hiring workers. When talking of expanding the fixed-term employment to other sectors, the government has said the idea was to “attract large scale investments at global scale” by improving the ease-of-doing-business.
Speaking to Newsclick, Dr K Hemalata, president of CITU, said, “This will only make the conditions of workers more precarious, as employers will have no obligation towards the workers. They’ll get a almost entirely free hand to hire and fire. There will be no job security and no social security for workers,” said 

As for the claims of employment generation, Dr Hemalata said, “Employment generation depends on the purchasing capacity of the people. If the people have money, if they purchase, only then will they produce and only then will there be employment generation. Whatever employment is being generated is not creating that kind of purchasing power among the workers. It is not any decent employment.”

“When the PM says that a person selling pakodas and earning Rs 200 a day is employed, when MGNREGA workers who don’t get even 40 days of work are said to be employed, then what is this type of employment?” 

She said even an International Labour Organization (ILO) report of 2015 had said that attacking the rights of workers was not how employment generation took place.

No wonder that a 2018 report by ILO estimates that 77% of Indian workers will be engaged in vulnerable employment by 2019.

Courtesy: Newsclick.in