homeenergy NewsFinance Ministry objects to BPCL divestment to IOC

Finance Ministry objects to BPCL divestment to IOC

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By Anshu Sharma  Sept 6, 2019 2:17:43 PM IST (Published)

The Narendra Modi government has a divestment target of Rs 1.05 lakh crore for the current fiscal and it wants to move fast in case of public sector undertakings (PSUs) such as BPCL. However, CNBC-TV18 has learnt that the finance ministry has raised objection on government's stake sale to IOC, as it can create a monopoly in the oil marketing business in India.

Sources privy to the developments have told CNBC-TV18, "Ministry of petroleum and natural resources is of the view that IOC should acquire 100 percent of government’s stake in BPCL but if IOC acquires BPCL, it will lead to IOC becoming a monopoly in the market which may not get clearance from the Competition Commission of India". IOC currently has a debt of about Rs 72,000 crore and has a planned capital expenditure plan of about Rs 25,000 crore for the year 2019-20.
The idea of strategic sale of government's stake particularly in BPCL is to offer a stake to a private entity and bring competition in the oil marketing sector which is currently held by big PSUs like IOC, HPCL and BPCL only. The plan for strategic stake sale is to monetise from government investments in PSUs and bring in the capital requirement and technology upgradation.
"Private sector participation in the oil marketing business will come only when a level playing field is offered to private entities. The government feels private sector participation in the sector will ensure scale and efficiency which will lead to cheaper fuel access to consumers at large." said a government official on a condition of anonymity.
As on April 2019, there are 64,624 fuel retail outlets in India of which 57,944 are owned by IOC, HPCL and BPCL alone. Private operators like Reliance Petro marketing, Nayara Energy and Shell make up the other 6,673.
The government has already given an in-principle nod for strategic sale of 23 PSUs. The Government has a divestment target of Rs 1.05 lakh crore for FY20. BPCL, Container Corporation of India, Shipping Corporation of India, BEML, Hindustan copper, Bharat Gold are likely to be the early contenders for strategic sale.
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