New Delhi: The government is considering a 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.
Keen to get multi-nationals in domestic fuel retailing to boost competition, the government is mulling selling most of its 53.3% stake in Bharat Petroleum Corporation Ltd (BPCL) to a strategic partner, officials aware of the development said.
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% 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.
BPCL privatisation, however, will need Parliament's approval.The Supreme Court had in September 2003 ruled that BPCL, as well as Hindustan Petroleum Corporation Ltd (HPCL), can be privatised only after Parliament amends a law it had previously passed to nationalise the two firms.
The ruling had followed a plan of the then BJP-led NDA government headed by Prime Minister Atal Bihari Vajpayee to privatise the two firms.
The apex court ruling had stalled the plan to sell 34.1% out of government's 51.1% 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.
BPCL was previously Burmah Shell, which in 1976 was nationalised by an Act of Parliament. Burmah Shell, set up in the 1920s, was an alliance between Royal Dutch Shell and Burmah Oil Co and Asiatic Petroleum (India).
HPCL was incorporated in 1974 after the takeover and merger of erstwhile Esso Standard and Lube India Ltd through the ESSO (Acquisition of Undertaking in India) Act passed by Parliament. The company was in January last year taken over by state-owned Oil and Natural Gas Corp (ONGC) for Rs 36,915 crore.
At that time, 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% stake in HPCL.
"We are bound by the Nationalisation Act and character of HPCL could not have changed so no open offer was mandated," he had said.