Union Cabinet gives go-ahead to biggest privatisation drive; to sell stake in BPCL, SCI, Concor

On Wednesday, the Union Cabinet approved sale of government's stake oil firm BPCL, shipping firm SCI and onland cargo mover Concor as well as decided to cut shareholding in select public sector firms below 51 per cent to boost revenue collections that have been hit by slowing economy, which is the biggest privatisation drive ever.

According to reports, the government will also offload its entire stake in power companies THDC India Ltd (74.23 per cent) and NEEPCO (100 per cent) and transfer management control to state-owned power producer NTPC Ltd. The Cabinet Committee on Economic Affairs (CCEA) approved sale of government's entire 53.29 per cent stake along with transfer of management control in the country's second-biggest state-owned refiner Bharat Petroleum Corp Ltd (BPCL) after taking out Numaligarh refinery from its fold, Finance Minister Nirmala Sitharaman told reporters here. It also approved the sale of an entire 63.75 per cent government holding in Shipping Corp of India (SCI) and a 30.8 per cent stake in Container Corp of India (Concor).

Briefing mediapersons after a meeting of the Cabinet Committee on Economic Affairs, Finance Minister Nirmala Sitharaman said the CCEA also gave in-principle approval to pare down government state in select Central Public Sector Enterprises (CPSEs) to below 51 per cent while retaining management control.

Besides, the government will sell its entire holding in THDC India and North Eastern Electric Power Corp Ltd (NEEPCO) to state power generator NTPC Ltd, the Finance Minister said. The government holds 74.23 per cent in THDCIL and 100 per cent NEEPCO. She, however, evaded a direct reply to the timeframe for the disinvestments and if the stake sale will happen during the current fiscal year ending March 31, 2020.

Parallelly, the Cabinet has also approved reducing government stake in select PSUs such as Indian Oil Corp (IOC) to below 51 per cent while continuing to retain management control. The management control will continue to be retained with the government after considering equity held by other state-owned companies in the divested firm. The government, currently, holds 51.5 per cent in IOC and another 25.9 per cent through state-owned Life Insurance Corp of India (LIC), and explorers Oil & Natural Gas Corp (ONGC) and Oil India Ltd (OIL), and the government can potentially sell 26.4 per cent for about Rs 33,000 crore.

A similar formula can also apply to ONGC and gas utility GAIL India Ltd. The stake sales are critical for the government to meet its disinvestment target of Rs 1.05 lakh crore set for the current fiscal year. The government's 53.29 per cent stake in BPCL is worth about Rs 63,000 crore going by its closing price of Rs 544.65 on the BSE. At current prices, the government's 30.8 per cent stake in Concor is worth about Rs 10,800 crore, while stake sale in SCI will fetch just over Rs 2,000 crore.

Last year, the government had sold its entire stake in Hindustan Petroleum Corp Ltd (HPCL) to state-owned Oil and Natural Gas Corp (ONGC) for Rs 36,915 crore. BPCL will give buyers ready access to 14 per cent of India's oil refining capacity and about one-fourth of the fuel marketing infrastructure in the world's fastest-growing energy market. The firm operates four refineries in Mumbai, Kochi in Kerala, Bina in Madhya Pradesh and Numaligarh in Assam with a combined capacity of 38.3 million tonnes per annum, which is 15 per cent of India's total refining capacity of 249.4 million tonnes. After removing 3 million tonnes capacity of the Numaligarh refinery, the new buyer will get 35.3 million tonnes of refining capacity.

It also owns 15,177 petrol pumps and 6,011 LPG distributor agencies in the country. Besides, it has 51 LPG bottling plants. The company distributes 21 per cent of petroleum products consumed in the country by volume as of March this year. BPCL also has more than a fifth of the 250 aviation fuel stations in the country. The government is keen to get international energy majors such as Saudi Aramco, Total SA of France and ExxonMobil to operate in the downstream fuel marketing business so as to bring in greater competition.

(Inputs from PTI)

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