Digging liquid gold

New Delhi, April 25: The voluntary retirement scheme (VRS) launched by Oil and Natural Gas Corporation (ONGC) has flopped. It is reliably learnt that only 250-odd applications were received by the oil major till the middle of last week with only a few days remaining for the deadline.

ONGC has around 38,000 employees and the top management is of the view that at least 10 per cent of them are surplus. The employees are well-paid and enjoy good perks as a result of which there are few takers for the modest severance package that is being offered currently.

ONGC had earlier worked out a golden handshake scheme for its employees which would give them two months’ salary for each year put in service as a lumpsum and they would also continue to receive their basic pay until the date of retirement.

The rationale behind this scheme was that the cost-to-company of each employee is more than double the salary on account of the handsome perks and bonus to which they are entitled. So if these employees stopped coming to work and merely drew their basic salary, ONGC would save more than the basic pay and at the same time increase its productivity.

However, the government had shot down this proposal as it was too lavish for a poor country like India. It was also felt that other public-sector companies, including those piling up losses, would seek similar voluntary retirement schemes citing the ONGC case as a precedent.

While cash-rich ONGC could afford this package, it would not be possible for other PSU firms to pay out such huge amounts and still remain economically viable. ONGC was, therefore, told to stick to the VRS that was applicable to all the public sector enterprises in the country.

ONGC’s excess manpower problem can be traced back to 1982-83 when it planned to increase the company’s staff to 55,000 to produce 10 million tonnes of oil and gas per year.

In 10 years, the manpower increased from about 26,000 to more than 48,000 in 1992. However, production stagnated at the 50-million-tonne level as there have been no major oil finds in recent years.

The current management is of the view that over the years there was no attempt to downsize manpower to match investments in automation, communications and infotech. Recruitments were carried out merely “on a felt-need basis” without any benchmarking study.