Govt may sell most of its stake in BPCL: report
07 October 2019
The government is likely to sell most of its 53.3 percent stake in Bharat Petroleum Corporation Ltd (BPCL) to a strategic partner, in a move that would break the stranglehold of state-run oil refining and marketing companies on the fuel retailing sector.
The move will also help the government meet at least a major part of its Rs1.05 lakh crore disinvestment target, say reports.
The government has also done away with the need to seek Parliament nod before selling it off to private or foreign firms by quietly repealing the legislation that brought it under state control.
The Repealing and Amending Act of 2016 had annulled "187 obsolete and redundant laws lying unnecessarily on the Statue-Book," including the Act of 1976 that had nationalised erstwhile Burmah Shell.
"The Act has been repealed and there is no need for a Parliament approval for strategic sale of BPCL," reports citing a senior official said.
The move also follows a decision by BP, which originally owned the company, to enter fuel retailing in India in a big way.
With an annual refining capacity of 34 million tonnes and about 25 per cent share of India's fuel market, BPCL is an attractive buy for companies like RIL-BP, Saudi Aramco, Total SA and several others looking to enter the world's fastest-growing fuel retail market.
Considering BPCL’s market capitalisation of about Rs1.11 lakh crores as at the close of market on 4 October, the 53.3 per cent government stake could garner more than Rs60,000 crore.
The Supreme Court had in September 2003 stalled an earlier NDA government plan to sell 34.1 per cent in BPCL by its ruling that any privatisation of BPCL or Hindustan Petroleum Corporation Ltd (HPCL) need Parliament nod to amend the law previously passed to nationalise the two firms.
The government, which owned 51.1 per cent stake in HPCL, wanted to sell it to a strategic partner along with management control. Reliance Industries Ltd, BP plc of UK, Kuwait Petroleum, Petronas of Malaysia, the Shell-Saudi Aramco combine and Essar Oil had expressed their interest in acquiring that stake before the Supreme Court stalled the process.
The government has overcome the Supreme Court mandated condition by the 9 May 2016, Gazette notification following President's assent to The Repealing and Amending Act, 2016.
The amendment, among others, repealed in "the whole" The Esso (Acquisition of Undertakings in India) Act, 1974, The Burmah Shell (Acquisition of Undertakings Act, 1976 and The Caltex [Acquisition of Shares of Caltex Oil The whole] Refining (India) Ltd and of the Undertakings in India of Caltex (India) Ltd] Act, 1977.
According to the Statement of Objects and Reasons for the Repeal Bill introduced in the Lok Sabha on 13 May 2015, the idea was to bring reform in the legal system by removing "incoherent and redundant laws."
"...the present proposal is to repeal 187 obsolete and redundant laws lying unnecessarily on the Statute-Book. On being enacted, it would reduce obsolete laws and bring in clarity to those for whose benefit the laws are enacted," it said.