The government has indicated that the disinvestment of Bharat Petroleum Corporation Limited(BPCL)is still on its priority agenda, said a senior government official. Earlier in May, the government called off the disinvestment process citing lack of bidders’ interest.
“BPCL is on ‘wait and watch’ mode for strategic disinvestment. Decision on timing depends upon improvement in geo-political situation,” the senior government official told BusinessLine. However, he admitted that the current geo-political situation are not conducive and bidders’ interest are low.
In addition to owning 52.98 percent of BPCL, the Centre also controls its management. The government on November 20, 2019, gave in-principle approval for strategic disinvestment of government’s shareholding in BPCL excluding BPCL’s shareholding in Numaligarh Refinery (NRL).
Further, as per the above approval, BPCL’s shareholding in NRL has to be divested to a Central Public Sector. BPCL has already sold the entire investment in equity shares of NRL to a consortium of Oil India and Engineers India and to the government of Assam during FY2020-21 at a total consideration of ₹9,875.96 crore.
Earlier, the government issued an Expression of Interest (EoI) for selling its stake along with management control. The Department of Public Asset and Investment Management (DIPAM) said multiple EoIs were received and they also initiated due diligence of the company.
Covid-19 impact
However, on May 26 this year, it said that the multiple Covid-19 waves and geo-political conditions affected industries globally, particularly the oil and gas sector. Owing to prevailing conditions in the global energy market, most of the Qualified Interested Parties (QIPs) have expressed their inability to continue in the current process of disinvestment of BPCL.
“In view of this, based on decisions of the Alternative Mechanism (Empowered Group of Ministers), the government of India has decided to call off the present EoI process for strategic disinvestment of BPCL and the EoIs received from QIPs shall stand cancelled,” said DIPAM, while adding that decision on the re-initiation of the process will be taken in due course of time.
New PSE Policy
The disinvestment of BPCL also needs to be seen from the point of view of the new Public Sector Enterprises (PSE) Policy. The policy has listed petroleum in one of the four groups known as ‘Strategic Sectors’.
It has been said that the Central Public Sector Enterprises (CPSEs) in the Strategic Sector/Non-Strategic Sector are to be taken up for privatisation, merger, subsidiarisation with another CPSE or for closure. “Only a bare minimum presence of CPSEs in the Strategic Sector is to be maintained,” it said.
As on date, the petroleum sector is dominated by CPSEs such as ONGC, Indian Oil, BPCL, GAIL, Oil India, etc. which shows why BPCL disinvestment is important for the government.