ONGC sweetens VRS package; offers employees medical benefits without extra cost

NEW DELHI: Hoping to trim its bloated workforce and reduce the number of non-performing employees, state-run Oil & Natural Gas Corp (ONGC) has come up with a sweetened separation package.

ONGC's new voluntary retirement scheme (VRS) offers lucrative medical benefits without any cost to employees. It will be available until the first week of July. Its previous VRS scheme did not provide free medical support after retirement. In the past six years, barely 476 people opted for VRS.

ONGC's more than 33,200 employees produce 26.92 million tonnes of oil a year. In comparison, 1,450 employees at Cairn India produce 10 million tonnes a year.

At Cairn India's level of productivity, ONGC would be able to do its job with less than 4,000 people, although the state-run firm says it is not a fair comparison because ONGC is an integrated energy company.

A company spokesman said the new package was not targeted against any employees. But senior executives, who did not want to be identified, said there were many non-performing employees. "We can't have a hire-and-fire policy like private firms. Therefore, we have launched the VRS," a senior ONGC executive said.

The spokesman said the company's management would decide whether or not to accept an application for VRS. "As has been seen in the last few years, about 150-200 applications are received (in a year), out of which about 100 to 150 are accepted. Acceptance is absolutely the discretion of the management. Keeping this trend in view, it is expected that the present scheme would evince similar results this year also," the spokesman said.


"There is no intention of deliberately reducing manpower through this scheme. It is only a facility for friendly disengagement for certain employees who would like to separate on health or personal grounds."

Company officials said ONGC is not overstaffed.

"ONGC has operations spread across the country and is also integrated in the value chain, whereas many other companies are operating in only one block. Thus, the comparison of per capita production of oil and gas with merely an E&P company can be quite misleading," a company spokesman said.

Former ONGC chairman RS Sharma said the company uses its own personnel for various tasks unlike many private operators that outsource most of the services and equipment. "ONGC has its own rigs, drilling machines, logistics systems and vessels etc that require large workforce. At the same time the company's unit cost is much lower than private companies," Sharma said.

A company spokesman said that on an average, each employee contributed 4.52 crore to ONGC's turnover and 85 lakh to its profit, which is highest for any integrated energy company.

ONGC officials said many private firms did not have incentive to keep their unit cost low as their entire expenditure is cost recoverable.

Under the existing exploration policy, in case of a commercial discovery, energy firms are first allowed to recover its entire investments from the proceeds of the block before sharing profit with the government.