Centre stake sale in BPCL, 4 others firms cleared
NEWDELHI: The Cabinet Committee on Economic Affairs on Wednesday gave in-principle approval to strategic disinvestment in five state-run companies, including a sale of the government’s entire stake in Bharat Petroleum Corporation Ltd (BPCL) ,while retaining its ownership of Numaligarh Refinery Ltd (NRL) through another public sector company.
The Cabinet decided on the divestment of the government’s entire 53.29% shareholding in the oil refiner and fuel retailers, along with transfer of management control t o a st rategic buyer, finance minister Nirmala Sitharaman said. That would exclude its 61.65% stake in NRL, located in Assam.
“NRL is carved out [of BPCL] and it will remain with a PSU [public sector undertaking],” Sitharaman said. Management control of NRL will al so be transferred to a central public sector enterprise (CPSE) operating in the oil and gas sector.
The four other companies in which the cabinet approved strategic stake sales were Shipping Corporation of India Ltd (SCI), Container Corporation of India Ltd (CONCOR) , Tehri Hydro Development Corporation India Ltd (THDCI) and North Eastern Electric Power Corporation Ltd (NEEPCO), Sitharaman said after a cabinet meeting chaired by Prime Minister Narendra Modi.
The cabinet decided to divest the government’s shareholding
of 63.75% in SCI along with transfer of management control to a strategic buyer, she said. In the case of CONCOR, the government will divest a 30.8% stake, along with transfer of management c ontrol , and retain its remaining 24% shareholding equity.
It has also decided to divest its entire stakes in THDCIL (74.23%) and NEEPCO (100%) along with management control to state-run energy company NTPC Ltd, she said.
The Cabinet also gave i n- principle approval f or a reduction of the government’s paid-up share capital below 51%
in select CPSES while retaining management control on a caseby- c a s e basi s , t a ki ng i nt o account t he government’s shareholding and that of institutions controlled by it, Sitharaman said.
The government has the target of raising Rs 1.05 lakh crore in 2019-20 from disinvestment. It has s o f a r r a i s e d a bout Rs 17,364.26 crore.
Two government officials working in two different ministries said on condition of anonymity that after hiving off NRL from BPCL the government may offer the first right of refusal to joint venture partners in the companies. According to the company’s annual report for 2018-19, the BPCL group consists of five Indian subsidiaries and six overseas units. The company also has 22 joint venture and associate companies.
In an attempt to derive maximum value from the eventual disinvestment, the government may also explore bifurcating the company’s interests in oil refining and fuel retail. There are investors who are interested in picking up controlling stakes in either its refining business or petrol pumps, one of the officials said.
The company, which has four refineries, has a total refining capacity of about 38 million tonnes per annum (MMTPA). It has about 15,000 retail outlets across the county, an executive in the company said, requesting anonymity.
BPCL’S refineries are located in Mumbai , Kochi in Kerala, Bina in Madhya Pradesh, under an equal joint venture with Oman Oi l C o mpa n y , a n d Numaligarh i n whic h t he Ass a m g o v e r n ment h a s a minority stake, the executive said.
Some domestic refiners are interested in the fuel retail business of BPCL because the company has fuel stations in lucrative locations across the county, but they may not want to buy BPCL’S refineries, the second official cited above said. That’s because the potential investors already have sufficient refining capacity, the second person said. In that case, BPCL’S refining business could be sold separately to other entities.
BPCL’S partners would get the first right of refusal to buying out the public sector oil company from the joint ventures, the official added.
The government has proposed divesting BPCL’S stake in Numaligarh Refinery to a public sector company because of its strategic positioning in the northeastern region. It is proposed that the company would be hived off and sold to another public sector undertaking (PSU) with interests in the northeast, the official said.
Numaligarh Refinery was incorporated with an authorised share capital of Rs 1,000 crore in 1993. The company operates a refinery with an annual capacity of 3 million tonnes in Numaligarh. NRL also has an LPG (liquified petroleum gas) bottling plant in Numaligarh.
BPCL earned revenue of ~3.37 lakh crore in 2018-19 and posted a net profit of ~7,132.02 crore.
The company’s shares closed at ~544.65 on the BSE on Wednesday, a gain of 4.87% from the previous trading day. The Sensex gained 0.45% to 40,651.64 points.
Criticising the government over its decision on disinvestment of BPCL and other companies, the Congress on Thursday accused it of “selling the country”.
“They did not create anything, but will sell everything. This is called selling the country. If there is Modi, it is possible,” tweeted Randeep Surjewala in Hindi.