ASSOCIATION OF SCIENTIFIC & TECHNICAL OFFICERS ay ‘OIL AND NATURAL GAS CORPORATION LTD., NEW DELHI Registered wih the Registrar of Societies U.P, Lucknow, Registration No.172 (1967-68) Medaledes SANJAY GOEL PRESIDENT, GHC No, ASTO-CWC/2016-17 /President/MoP&NG Date: 22.03.2017 To, Shri Dharmendra Pradhan Hon'ble Minister of Petroleum & Natural Gas, Government of India, Shastri Bhavan, New Delhi. Sub.: Report of the 3 Pay Revision Committee. Sir, On behalf of the Association of Scientific and Technical Officers (ASTO), ONGC, we ‘would like to put on record our most sincere appreciation and gratitude to the Government of India for the timely constitution and submission of the report by the 3! Pay Revision Committee, constituted for pay revision of CPSEs. This is for the first time in history that the Pay Revision Committee report for CPSEs has been submitted without any extensions before the due date of pay revision. Sir, securing a rapid and sustainable economic growth, generation of employment, reduction of disparities in income & wealth and creation of the values for a free and equal society have been the foremost objective of the present government. All CPSEs are contributing to this effort by helping in building a base for a state of the art infrastructure, bring about a planned development of the entire country and improve living condition of the masses. ‘As a matter of fact, public enterprises are extended arms of the government for economic development and in achieving socio economic objectives. Sir, the Public Sector Undertakings with the twin objectives of creating a sustainable business as well as ensuring socio economic development of the society have an identity distinctive of both, the private sector and the government. Thus the high level of responsibility and accountability of the ONGC executives with distinctive objectives may please be appreciated and they may be remunerated accordingly to ensure high level of effectiveness in achieving these objectives. Further, while the ONGC executives do not aspire to be compensated at par with the global industry peers, the compensation needs to be taken care of in a way to keep them highly motivated to ensure sustainable growth in the highly competitive business environment, Sir, we had made several representations with the 3" PRC and had put up the issues concerning us In the existing pay structure. While the Committee had looked into the Issues and has made efforts to address them, there are some recommendations in the report which would contravene the existing guidelines / provisions and would result in taking away some ofthe existing benefits. We would also like to apprise your kind self same of the issues affecting the compensation of the executives of Oil and Natural Gas Corporation (ONGC). The issues have been highlighted and are enclosed herewith for your kind perusal and sympathetic consideration. In view of above, Sir, your kind intervention is highly solicited in resolving the issues highlighted for the benefit of the executives of ONGC and boost the morale to ensure a sustainable growth of the company. With warm regards, Enclosure: As stated above. Copy to: 1. The Secretary, Ministry of Petroleum & Natural Gas, Government of India, New Delhi. 2. The Secretary, Department of Public Enterprises, Government of India, New Delhi, 3, The C&MD, ONGC, PDDUU Bhavan, Vasant Kunj, New Delhi. 4, The Director (HR), ONGC, PDDUU Bhavan, Vasant Kunj, New Delhi,1. Existing Pay Anomalies/ Aberrations: A number of pay aberrations have arisen after the implementation of the last PRC (01.01.2007). Aberrations are in the form of: * Junior Executives drawing more salary than Senior Executives. Executives joining the organization after 01.01.2007 are drawing considerably less pay than those joining before 01.01.2007. Staff level employee with similar vintage drawing more salary than an executive. These anomalies will have an add-on / cumulative effect with the implementation of the 3 PRC. It is requested that the respective Boards be authorized to address these pay differences / aberrations before implementation of the pay revision w.e.f. 01.01.2017. 2. Fitment benefit: The fitment benefit recommended by the earlier PRCs was: i). 20% during the 1 PRC (Basic +DA as on 1.1.97) ii). 30% during the 2 PRC (Basic +DA as on 01.01.07) Further, the 2 PRC for CPSEs as well as the 7" Pay Revision Commission had recommended graded fitment, keeping in view the greater degree of responsibility and accountability at higher levels. The 7th Pay Revision Commission has accordingly, recommended fitment benefit ranging from 14.22% to 25.00%. The 3" PRC has acknowledged that CPSEs being commercial entities should provide for reasonable increase in the fixed pay at a uniform level and compensate more to the senior level executives from variable pay (PRP). However, the PRP as recommended by the 3 PRC is governed by multitude factors wherein the individual's performance is an inconsequential component. Thus, keeping in view the above rationale, it is requested that graded fitment may also be recommended at 15% to 25% of Basic + DA for EO to CMD level in graded pattern. 3. Increments: The 3 PRC has recommended 3% annual and promotion increment. However as the degree of responsibility and accountability increases at higher levels, the compensation level thus should rise equitably. As such it is suggested that the promotional increment may be kept t 5%. » a4, Cafeteria Allowance: The 7" CPC as well as 3° PRC have suggested reduction of the percentage based allowances by a factor of 0.8. However the Cafeteria Allowance, which is currently 50% has been recommended to be reduced to 35% by the 3° PRC ie. reduction by a factor of 0.7. It is thus requested that the Cafeteria Allowance be kept at 40%, keeping in view the implementation of the factor of 0.8. 5. Performance Related Pay The 3" PRC has recommended that the overall profits for distribution of PRP shall be limited to 5% of the year's profit accruing only from core business activities and the ratio of PRP from profit for the year to Incremental profit for the year shall be 65:35, Public Sector Undertakings (PSUs) in India are the entities which have the status of being Government-owned companies and are considered as ‘State’ under Article 12 of the Constitution of India. CPSEs apart from economic and commercial considerations have a social obligation for the welfare of public at large. Besides, the PSUs serve the interest of society by taking responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations. Accordingly, the CPSEs generally undertake a number of non-commercial responsibilities in furtherance of their commercial objectives. Further, it is a known fact that exploration of Hydrocarbons per se is a highly risky business and profitability at times is beyond the control of ONGC due to market driven prices / Government of India interventions and thus, the Profitability of the CPSEs are not on the commercial factors alone. In order to undertake huge social responsibility towards countrymen, as per Government of India directive, ONGC has extended support in the name of subsidy for the last three years, as enumerated below for kind consideration: SI.No. [FY Amount 4 2013-14 Rs. 56,384.29 Crs | 2. 2014-15 Rs. 36,299.62 Crs | 3. 2015-16 Rs._ 1,096.12 Crs | This had an impact on the Company's Profitability. Incremental Profit is an important factor in performance related pay (PRP), which is to the tune of 35%. In view of the circumstances listed above, it is not possible for an E&P company like ONGC to sustain incremental profits year after year. /t is requested that the ratio of 65:35, be made to 80:20. , 1AAs per the existing guidelines for allocable profits for PRP, the overall cap for 5% of PBT exists for allocation of PRP. The 3° PRC has also maintained the overall limit of 5% of PBT for distribution of PRP. The ceiling of 5% of PBT, in the current scenario itself, will be insufficient to meet the requirement of full PRP payment, after implementation of pay revision. It is therefore suggested that the ceiling for allocable profit be enhanced to 7.5% of PBT to justify the PRP. 6. Location based Compensatory Allowances The 2nd PRC had recommended that the following allowances will be outside the purview of Cafeteria Allowance: a) North East Allowance (inclusive for Ladakh Region) limited to 12.5% of BP; b) Allowance for Underground Mines limited to 15% of BP; c) Special Allowance (up to 10% of BP) for serving in the difficult and far flung areas; d) Non-practicing Allowance for Medical Officers up to 25% of BP. However, the 3 PRC has clubbed the above allowances at (a) & (c) above under the location based compensatory allowances. However, with the rider clause that only the higher rate of Allowance will be applicable in the event of a place falling in more than one category has been introduced which would result in reduction of benefits for employees posted in field locations. Currently employees working in field operations are paid the special allowance under item (c) above. It is therefore requested that rider clause may be removed. 7. Work based Hardship Duty Allowances: The 3rd PRC has recommended that payment of work based hardship duty allowance up to 12% of Basic Pay shall be admissible for following hardship duty: - a. For performing duty in Underground mines, b. For performing duty at Offshore exploration site, and c. For performing duty at Hydro-project site located within 200 kilometers from the international border of the country. During interactions with PRC, ASTO had requested that due to the difficult nature of E&P activity the upstream oil companies personnel posted directly in the field be motivated by introducing offshore / onshore allowance. We are thankful to PRC for understanding specific problems being faced by E&P personnel, like ONGC. It is requested that the allowances for offshore and onshore site duties may not be combined with any other allowance and be kept separate. /t is requested that the following offshore/ onshore allowance may be introduced: Offshore Allowance — 35 % of Basic Pay, and Onshore Allowance — 20% of Basic Pay \Further, the Board may also be empowered to decide on any other work based hardship duty allowances, which may not be appearing in the above list but are of same or similar nature, within the ceiling prescribed above. 8. Periodicity The 3rd PRC's has recommended that the review of the compensation & benefits structure of the CPSE executives should happen in line with the periodicity as decided for Central Government employees but it should not be later than 10 years. However, it is requested that the periodicity of compensation structure should be a tenure of 5 years or alternatively, there should be provision to allow full merger of actual DA with Basic Pay, after 5 years , i.e. as on 01.01.2022. 9. House Rent Allowance (HRA) It is requested that the rates of HRA may be retained as per existing rates i.e. 30%, 20% and 10% for different categories of cities. Moreover, we would like to draw your kind attention to the practical & objective problem of implementation of population based classification of cities. At some locations which are industrial towns/tourist places, the rental rates are far higher than the category under which they are classified. 10. Leased accommodation As per the 3" PRC, the respective Board of CPSE has been empowered to decide the lease rental ceilings applicable for the different level of executives. The above recommendations toward lease accommodation facility shall be applicable in lieu of availing HRA for rented accommodation. However, if an executive is staying in his/her own house then normally he or she should be entitled to the HRA amount but if the said house is taken as lease accommodation for self-occupation purpose, then in such case the lease rental ceilings (after adjusting the House Rent Recovery amount) should not exceed the net applicable HRA amount. It is requested that on sel-lease, maintenance charges be kept out of the net applicable HRA. 41. Family Planning and Higher Qualification Incentives: Prior to the pay revision of 2007, incentives in the form of additional increments were provided for family planning and higher qualification. The purpose of these incentives was to promote small families and up gradation of knowledge and skills by the employees. These allowances need fo be reintroduced to motivate employee to follow the small family norms and upgrade their qualifications. Higher / additional qualifications leads to acquisition of new skill set by the employees leading to better productivity. Ww412. Funding/Payment towards gratuity: The concern of CPSEs that the ceiling of 30% of BP + DA on superannuation benefits is not sufficient to meet the requirements, has been appreciated by the 3° PRC in order to address the issues & it has been recommended that funding/payment towards the additional amount beyond the gratuity of Rs. 10.0 lakhs shall allowed to be outside the limit of 30% of BP + DA However, it is requested that gratuity being a statutory benefit, the total amount of gratuity may be kept outside the limit of 30% of BP + DA in order to provide adequate social security to the retiring senior citizens.