BPCL strategic sale: Government eyes private entities

The finance ministry is looking at strategic divestment of BPCL and eyeing private entity participation as fuel retail business in India is mostly run by state-run oil marketing companies. CNBC-TV18 reported on this on September 06. Market share in fuel retail business in India is currently at about 50 percent with IOC, about 25 percent each in HPCL and BPCL. The idea of strategic divestment is to monetise government’s investments made in public sector companies.

“NITI Aayog is of the view that 100 percent stake of government should be divested in BPCL under strategic divestment to maximize revenue realization,” said a source privy to the details.

Earlier it was reported that IOC may buy the government’s stake, which is at about 53 percent in BPCL.

“IOC acquiring a stake in BPCL will not lead to unlocking value or synergy between the companies, a private investor will bring value but believe strategic divestment should be done in tranches instead of one go,” said an official on condition of anonymity.

On September 05, CNBC-TV18 had reported that DIPAM (Department of Investment and Public Asset Management) may seek cabinet nod on guidelines which will ensure transparency and speed up the process of the strategic sale.

As and when BPCL is taken up for strategic divestment, it will be open for all private entities which will include international players. The idea is to sell government stake in public companies where the sector has come of age. International companies like Shell, Total, Aramco have shown interest in fuel retail business last year after meeting Prime Minister Narendra Modi.