BPCL privatisation: Indian Oil, different PSUs to not be allowed to bid for state-run oil agency, hints Dharmendra Pradhan
New Delhi: Oil Minister Dharmendra Pradhan on Thursday hinted that public sector companies resembling Indian Oil Company (IOC) might not be allowed to bid for purchasing authorities stake in Bharat Petroleum Company Ltd (BPCL), for which a purchaser could should shell out as a lot as Rs 90,000 crore.
The Cupboard Committee on Financial Affairs had on Wednesday determined to promote the federal government’s total stake within the nation’s second-largest state refiner BPCL and India’s largest transport firm Delivery Company of India (SCI). It additionally accredited privatisation of Container Company of India whereas additionally giving nod to paring stake beneath 51 % in choose public sector undertakings however with out dropping management.
“Since 2014, we have a clear vision that the government has no business to be in business,” Pradhan informed reporters right here.
“We have examples of 2-3 sectors such as telecom and aviation where ushering in private participation has led to customers benefiting from price cuts, efficiency, and better service. And yesterday (on Wednesday), several reformist decisions were taken.”
BPCL will give consumers prepared entry to 14 % of India’s oil refining capability and about one-fourth of the gasoline advertising infrastructure on this planet’s fastest-growing power market.
It, nonetheless, will probably be bought after carving out Numaligarh Refinery from its portfolio and given to a pubic sector unit.
“Numaligarh refinery was set up as per Assam Accord and it will remain a public sector unit. Assam Chief Minister had requested Prime Minister (Narendra Modi) to retain public sector character of Numaligarh Refinery and that has been accepted,” he mentioned.
Pradhan, nonetheless, didn’t say if IOC or Oil India Ltd, which already has a stake within the refinery and likewise provides crude oil to it, will take over the unit.
“The details have to be worked out,” he mentioned. “Finance Minister (Nirmala Sitharaman) has stated that the privatisation of BPCL will happen this fiscal and we hope to adhere to the timeline.”
Requested if public sector items will probably be allowed to bid for the federal government’s 53.29 % stake, he mentioned: “Nitty-gritty and details of the disinvestment process will have to be worked out but when I say the government has no business to be in business, it is indicative of possible future course of action.”
On the present buying and selling worth of BPCL, the federal government’s 53.29 % stake is valued at a shade lower than Rs 62,000 crore. On high of this, the acquirer must make an open supply to purchase a further 26 % stake from minority shareholders for about Rs 30,000 crore.
Final 12 months, the federal government had bought its total stake in Hindustan Petroleum Corp Ltd (HPCL) to state-owned Oil and Pure Fuel Corp (ONGC) for Rs 36,915 crore.
Pradhan mentioned the privatisation of BPCL was following the coverage of ushering in better competitors in sectors that may maintain on their very own.
Better non-public participation, like within the telecom and aviation sector, will result in efficiencies and higher service to customers, he mentioned.
The CCEA had on Wednesday additionally accredited the sale of a complete 63.75 % authorities holding in SCI and 30.eight % out of the federal government’s 54.80 % stake in Container Corp of India (Concor).
In addition to, the federal government will promote its total holding in THDC India Ltd (THDCIL) and North Japanese Electrical Energy Corp Ltd (NEEPCO) to state-owned energy generator NTPC Ltd, the finance minister has mentioned.
The federal government holds 74.23 % in THDCIL and 100 % NEEPCO.
Parallelly, the Cupboard had additionally accredited decreasing authorities stake in choose PSUs resembling IOC to beneath 51 % whereas persevering with to retain administration management.
The administration management will proceed to be retained with the federal government after contemplating fairness held by different state-owned firms within the divested agency.
The federal government, at the moment, holds 51.5 % in IOC and one other 25.9 % by means of state-owned Life Insurance coverage Corp of India (LIC), and explorers ONGC and Oil India Ltd (OIL), and the federal government can probably promote 26.four % for about Rs 33,000 crore.
An analogous formulation may apply to ONGC and fuel utility GAIL India Ltd.
The stake gross sales are crucial for the federal government to fulfill its disinvestment goal of Rs 1.05 lakh crore set for the present monetary 12 months.
At present costs, the federal government’s 30.eight % stake in Concor is price about Rs 10,800 crore, whereas stake sale in SCI will fetch simply over Rs 2,000 crore.
BPCL operates 4 refineries in Mumbai, Kochi (Kerala), Bina (Madhya Pradesh) and Numaligarh (Assam) with a mixed capability of 38.three million tonnes every year, which is 15 per cent of India’s whole refining capability of 249.four million tonnes. After eradicating three million tonnes capability of the Numaligarh refinery, the brand new purchaser will get 35.three million tonnes of refining capability.
It additionally owns 15,177 petrol pumps and 6,011 LPG distributor companies within the nation. In addition to, it has 51 LPG (liquefied petroleum fuel) bottling crops. The corporate distributes 21 % of petroleum merchandise consumed within the nation by quantity as of March this 12 months and has greater than a fifth of the 250 aviation gasoline stations within the nation.
The federal government is eager to get worldwide power majors resembling Saudi Aramco, Complete SA of France and ExxonMobil to function within the downstream gasoline advertising enterprise in order to usher in better competitors.
At present, 95 % of retail petrol and diesel gross sales and close to 100 % of cooking fuel (LPG) and kerosene gross sales are managed by the general public sector items.
As on 31 March, BPCL reported money and money equivalents of round Rs 5,300 crore, towards Rs 10,900 crore of debt maturing over the subsequent 15 months.
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