Govt mulls privatising BPCL, may sell stake to foreign company: Sources

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, a senior government official with direct knowledge of the matter told Cogencis.

There is the option of privatising the company by selling the government stake to one of the private players. This private player can be domestic or from one of the global companies. There are a lot of large global companies which may get operational synergy by taking over BPCL, same is the case for some domestic private companies, said the official.

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.

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.

A number of global oil and gas majors are looking to enter the fuel retail market in India, with some even investing in Indian refineries given the country's rapidly growing energy needs. India is currently the third largest consumer of crude oil globally and has one of the highest refining capacities in the world.

Among the global players that are eyeing the fuel retail business in India are Saudi Aramco, BP plc, and Royal Dutch Shell.

In fact, Saudi Aramco is in talks with Reliance Industries Ltd to pick up a stake in the latter’s refining and petrochemicals business and is one of the partners in the west coast mega refinery project. These investments are part of Aramco’s effort to diversify into downstream oil and gas operations.

Similarly, Russia’s Rosneft has already invested in the 20-mtpa Vadinar refinery, which was earlier owned by Essar Oil 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.

Today, shares of BPCL ended at 408.55 rupees, up 6.3%, on the National Stock Exchange.

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