Govt. may sell BPCL to meet the target of disinvestment

The government is considering the proposal to sell India's second-largest state refiner and fuel retailer BPCL to foreign and private firms but the privatisation plan will need a prior nod of Parliament, officials said.

Government has plans to get multi-nationals in domestic fuel retailing to boost competition, the government is mulling selling most of its 53.3 per cent stake in Bharat Petroleum Corporation Ltd (BPCL) to a strategic partner.

In Box: BPCL operates four refineries at Mumbai, Kochi in Kerala, Bina in Madhya Pradesh and Numaligarh in Assam with a combined capacity to convert 38.3 million tonnes of crude oil into fuel.

Privatisation of BPCL will not just shake up fuel retailing sector long dominated by state-owned firms but also help meet at least a third of the government's Rs 1.05 lakh crore disinvestment target. BPCL at the close of market on September 27 had a market capitalisation of about Rs 1.02 lakh crore and even a 26 per cent stake sale at this valuation would fetch the government Rs 26,500 crore plus a control-and-fuel-market-entry premium ranging anywhere between Rs 5,000 crore to Rs 10,000 crore, officials said.

In Box:The slowdown has impacted the oil sector including Indian Oil, BPCL, HPCL's total debt rises to 5-year high of Rs 1.62 lakh crore in FY19

The apex court ruling had stalled the plan to sell 34.1 per cent out of government's 51.1 per cent stake in HPCL to a strategic partner along with management control. Reliance Industries Ltd, BP plc of UK, Kuwait Petroleum, Petronas of Malaysia, the Shell-Saudi Aramco combine and Essar Oil had expressed their interest in acquiring that stake before the Supreme Court stalled the process.

Officials said BPCL in present times will be an attractive buy for companies ranging from Saudi Aramco of Saudi Arabia to French energy giant Total SA which are vying to enter the world's fastest-growing fuel retail market.

Oil Minister Dharmendra Pradhan had cited the four-decade-old Nationalisation Act to justify exempting ONGC from making an open offer after acquiring the government's 51.11 per cent stake in HPCL.

"There is no challenge before this Court (Supreme Court) as to the policy of disinvestment. The only question raised before us whether the method adopted by the Government in exercising its executive powers to disinvest HPCL and BPCL without repealing or amending the law is permissible or not. We find that on the language of the Act such a course is not permissible at all," Justice S Rajendra Babu and G P Mathur wrote in the September 16, 2003 order "restraining the Central Government from proceeding with disinvestment resulting in HPCL and BPCL ceasing to be Government companies without appropriately amending the statutes concerned suitably."

BPCL operates four refineries at Mumbai, Kochi in Kerala, Bina in Madhya Pradesh and Numaligarh in Assam with a combined capacity to convert 38.3 million tonnes of crude oil into fuel. It has 15,078 petrol pumps and 6,004 LPG distributors.

Lastly, India has a total refining capacity of 249.4 million tonnes of refining capacity and 65,554 petrol pumps and 24,026 LPG distributors.