Bpcl To Outsource Non-Core Work

Bharat Petroleum Corporation (BPCL) is planning to outsource a majority of its non-core operations to outside parties. It is also planning to increase the integration of activities such as sourcing of crude and sharing of facilities with Kochi Refineries, which it had acquired last year.

These initiatives are part of the company's efforts at improving its cost effectiveness. The company is looking at outsourcing many of its non-core operations such as catering services, fleet management services to professional companies to concentrate on process related operations.

Outsourcing is expected to lay the ground for a reduction in the company's workforce through voluntary retirement schemes. On the other hand, sharing crude procurement and other facilities is expected to lower refining costs.

 

Mahesh Lal, director (refineries), BPCL said, "There is a big opportunity in outsourcing many of our non-core operations to professional companies. Also, we are looking at options to integrate the operations with Kochi Refineries to improve our cost competitiveness."

Lal, however, declined to reveal the savings targeted through these measures.

All state-owned refining companies, barring some newly constructed refineries and refineries of private companies, are way below global standards in cost-competitiveness, informed sources said.

Sundara Krishnaswami, senior vice-president at Solomon Associates, the US-based management consultancy firm said most Indian oil companies pay almost 50-70 cents per barrel of crude refined (at 6-million tonne of refining capacity) by them due to inefficient practices. Most state-owned refiners, barring some new refineries, fall in the fourth quartile on the cost effectiveness charts, leaving a lot of scope for improvement, he added.

Speaking at a seminar organised by the Petroleum India International (PII) on "Cost Effectiveness in Refinery Sector", S Rammohan, chairman & managing director, Chennai Petrochemicals Corporation said, "If the reputation of the (Indian) refinery is to be preserved and enhanced in future, refineries will have to take a much closer look at the efficacy of their activities and efficiency of its operations than hitherto. Cost effectiveness has therefore become the mantra for survival and future success of any refinery in India."