Government mulling selling BPCL stake to MNC

New Delhi: The government is exploring the option of privatising the country's second-largest public sector refiner Bharat Petroleum Corp Ltd and is open to selling it to a global oil and gas major.

If the government decides to privatise BPCL, it would help meet a significant chunk of the 1.05-trln-rupee disinvestment target for the current financial year (Apr-Mar).

It would also lead to more competition in the fuel retail sector as currently over 90% of the fuel retail market is controlled by the three public sector refiners--Indian Oil, BPCL, and Hindustan Petroleum Corp Ltd.

So far, the Narendra Modi government has relied on offloading small percentage of its shares in various public sector undertakings on the stock exchanges and acquisitions among PSUs to meet divestment targets. If this proposal fructifies, it would the first big-ticket privatisation under this government.

But the Modi government may not find such a decision a cakewalk: An earlier attempt to sell state refiner Hindustan Petroleum to a single investor and Bharat Petroleum to the public was stalled by a Supreme Court order in 2003 following protests by labour unions and political groups.

It was Prime Minister Indira Gandhi who had nationalised Burmah Shell in the 70s by an act of Parliament. Thereafter, it came to be known as Bharat Petroleum in its present avatar.

As per the latest available shareholding data, the government owns 53.29% stake in BPCL.

There was some speculation in media that the government may ask the largest state-owned refiner Indian Oil Corp Ltd to acquire controlling stake in BPCL.

The government, however, is of the view that selling stake in BPCL to a private sector player or a global company would fetch better value, the official said.

The official, however, declined to comment on the timeline the government may be considering for any such transaction since the proposal is in a nascent stage.

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Free Press Journal