Oil PSUs asked to spend 2% of profits in CSR activities

NEW DELHI: Public sector oil companies like ONGC, Indian Oil, Gail India, BPCL, HPCL and Oil India will spend at least 2% of their net profits for 2008-09 on social development projects this year as the government has set a floor for their social spending, petroleum secretary RS Pandey said.

After steel public sector units (PSUs), the government has set a mandatory target on social welfare activities for oil PSUs. The move could also be extended to public sector companies in other sectors.

At present, PSU oil companies spend 0.5% to 0.75% on corporate social responsibility (CSR) activities, which is voluntary, Mr Pandey said.

The boards of Indian Oil and BPCL have already cleared a proposal to hike their CSR spending, while other oil PSU boards are expected to follow suit within a month.

According to company officials, who did not want to be named, BPCL has decided to increase its CSR spending from 0.5% of the previous year���s net profit to 2% and Indian Oil has hiked it from 0.75% to 2%.

Oil PSUs are yet to declare their annual results for 2008-09. If their net profits stay flat at 2007-08 levels, they will be spending Rs 700 crore on social projects this year.

The oil ministry have decided to keep a close watch on these companies��� social projects. ���The ministry will review each company���s CSR progress quarterly and ensure that the fund is actually used in the development of society,��� Mr Pandey said. It will compile an annual report on oil companies��� CSR activities and keep that in the public domain.

Also, companies are instructed not to discontinue their developmental activities even if they report net loss. ���In case the company is not able to make a profit in a particular year, its chairman will be authorised to approve the budget required for the sustainability of various medium and long-term initiatives undertaken by the company,��� a BPCL official said.