Access to Petronet, IGL boards key USP for BPCL divestment
NEWDELHI: Automatic access to the boards of two valued energy firm—petronet LNG Ltd (PLL) and Indraprastha Gas Ltd (Igl)—will be one of the key selling points of state-run Bharat Petroleum Corp. Ltd’s (BPCL) strategic disinvestment, the process for which will start this month, two officials with knowledge of the matter said.
A private investor, by virtue of acquiring ownership of the BPCL, will become one of the promoters in both the PLL and IGL, the officials said requesting anonymity.
The petroleum secretary will, however, remain the chairman of PLL, and in the case of IGL, the company’s managing director will be nominated by the other promoter, GAIL (India) Ltd, according to their respective articles of association, they said.
The PLL is unique. The government holds 50% equity stake in it through four public sector companies with the petroleum secretary as its chairman. The PLL is treated as a private company because combined equity stakes of state-run firms in it is less than 51%. The four promoters of the PLL are Oil and Natural Gas Corp. Ltd (ONGC), Indian Oil Corp. Ltd (IOC), GAIL (India) Ltd and BPCL with 12.5% shareholding each. Balance stakes in the company are held by financial institution and retail investors.
The IGL is again a public sector-promoted private entity, which is promoted by state-run
GAIL and BPCL with equal shareholding of 22.5% each. Balance equity in the company is held by banks, financial institutions and the public.
Two people involved in the disinvestment processes said on condition of anonymity that the PLL and IGL are two valued companies and being their promoter would be a major incentive for the prospective buyer. But no private entity would like undue interferences of the government or its nominees at the board level. “Although the IGL and PLL offer great values to prospective private bidders, direct or indirect control of the government is certainly a dampener,” one of the people said.
Spokespersons for the Union finance ministry, IGL and PLL declined comments on this matter.
“Preliminary processes for divesting government’s entire 53.29% equity stake in the BPCL, minus its subsidiary NRL (Numaligarh Refinery Ltd), have been completed. An EOI (expression of interest) is expected very soon,” one of the officials mentioned above said.
The Cabinet Committee on Economic Affairs (CCEA) on November 20 gave in-principle approval to strategic disinvestment in five state-run companies, including a sale of the government’s entire stake in the BPCL, while retaining its ownership of NRL through another public sector company.
The four other companies in which the cabinet approved strategic stake sales are Shipping Corp. of India Ltd (SCI), Container Corp. of India Ltd (Concor) , Tehri Hydro Development Corp. India Ltd and North Eastern Electric Power Corp Ltd.
BPCL’S disinvestment is expected to fetch ₹60,000 crore.