)
The UPA government has repeatedly treated public sector companies like non-profit organisations depriving them of opportunities for growth, asking them to subsidise various expenses so that the government can collect votes, bend the rules so that private sector or international players benefit at their cost. Now, PSU oil marketing companies are being made to share their airport infrastructure to accommodate private and international oil companies.
The government’s inaction and policy paralysis has resulted in oil and coal companies missing out in acquiring energy assets globally. As a result some of the best deals have been cornered by China. Air India has been literally bled to death by making them buy aircraft when they did not need them and then taking away its most profitable routes and passing them on to private players. Erstwhile telecom giant MTNL is now surviving on government dole, thanks largely to it not being allowed to grow in other markets.
The only ones that seem to be doing well are those supplying essential goods like electricity, fuel, coal, mineral and food. But most of them could have done much better had they not been asked to subsidise in order to please vote banks.
Also Read
OMCs have been asked to share their facility in Delhi, which happens to be Asia’s largest terminal. Delhi and Mumbai account for nearly 52 per cent of all ATF consumed in India. Delhi’s fuel farm is operated by Delhi Aviation Fuel Facility (DAFFL), which is a joint venture between Indian Oil, Bharat Petroleum and Delhi International Airport Authority.
Both OMCs are going to lose out with this move. They sit on stretched balance sheet, thanks to subsidised LPG, kerosene and diesel, and as a result of which, they can offer only limited credit to airline companies for ATF. Profit from ATF and petrol is what helps these OMCs cushion the impact of subsidised products. Domestic private players, and Shell, have the financial muscle to give higher credit periods to airlines, which anyway are cash-strapped and would shift quickly to the supplier who provides better credit facility.
Since the government of India is the promoter of OMCs, there is unlikely to be any voice of dissent, except for stray cases of retired senior employees. Current employees are unlikely to resist the move lest they be transferred or sidelined, as was the case in Coal India.
When the promoter of a company is in a destructive mood, why should investors continue with the company? The recent rounds of disinvestment, which are taking place at a significant discount to market prices, reflect this mood. There are few buyers for government companies. Unless the government starts respecting its companies and protecting its territory, few investors will be keen on investing, except at throwaway prices.
