Major oil companies in the world have reportedly lined up to bid for the government's stake in the state-run Bharat Petroleum Corporation Ltd (BPCL), said media reports.
The government has 53.3 percent stake in the BPCL which the bidders may buy either on their own or through a consortium.
Saudi Aramco, Rosneft, Kuwait Petroleum, ExxonMobil, Shell, Total SA and Abu Dhabi National Oil Co are among the global energy companies that reportedly held talks with the government for its stake in the public sector oil company, said a report in Mint quoting sources in the know of the matter.
The Department of Investment and Public Asset Management (DIPAM) may hire investment banker, legal adviser and asset valuer as part of the stake sale process, said the report.
Privatisation of BPCL will not just shake up the fuel retailing sector long dominated by state-owned firms but also help meet at least a third of the government's Rs 1.05 lakh crore disinvestment target.
The stake sale in state-run companies is the top priority for the government at a time when the fiscal deficit is expected to widen in the coming months.
Besides this, factors such as lower-than-expected goods and services tax collections and the last month's corporate tax cut announcement by Finance Minister Nirmala Sithraman that may cost the exchequer about Rs 1.45 trillion are expected to add to the fiscal deficit this financial year.
BPCL Nationalisation Act repealed in 2016
Ahead of a proposed move to fully privatise state-owned fuel retailer BPCL, the government had repealed the legislation that had nationalised the company, doing away with the need to seek Parliament nod before selling it off to private and foreign firms, reported PTI.
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"The Act has been repealed and there is no need for a Parliament approval for strategic sale of BPCL," a senior official said.
Keen to get multi-nationals in domestic fuel retailing to boost competition, the government has plans to sell most of its 53.3 percent stake in BPCL to a strategic partner.
BPCL offers attractive buy for companies ranging from Saudi Aramco of Saudi Arabia to French energy giant Total SA which are vying to enter the world's fastest-growing fuel retail market. It will not only give them 34 million-tonne in refining capacity, but also access to about 25 percent share of India's fuel marketing.
In September 2003, the Supreme Court had ruled that BPCL, as well as Hindustan Petroleum Corporation Ltd (HPCL), could be privatised only after Parliament amended a law it had previously passed to nationalise the two firms.
The ruling had followed a plan of the then BJP-led National Democratic Alliance (NDA) government headed by the then Prime Minister Atal Bihari Vajpayee to privatise the two firms.
The apex court ruling had stalled the plan to sell 34.1 percent out of government's 51.1 percent stake in HPCL 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.
But the Supreme Court-mandated condition is no longer applicable, they said citing the 9 May 2016, Gazette notification following President's assent to The Repealing and Amending Act, 2016.
Besides others it listed repealing 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.
BPCL was previously Burmah Shell, which in 1976 was nationalised by an Act of Parliament. Burmah Shell, set up in the 1920s, was an alliance between Royal Dutch Shell and Burmah Oil Co and Asiatic Petroleum (India).
The Supreme Court had cited the ESSO (Acquisition of Undertaking in India) Act and the Burmah Shell (Acquisition of Undertaking in India) Act, 1976 and Caltex (Acquisition of Shares of Caltex Oil Refining India Ltd and all the Undertakings in India for Caltex India Ltd) Act, 1977 to rule that the government cannot privatise HPCL and BPCL without approaching Parliament for changing the Nationalisation Act.
BPCL operates four refineries at Mumbai, Kochi in Kerala, Bina in Madhya Pradesh and Numaligarh in Assam with a combined capacity to convert 38.3 million tonnes of crude oil into fuel. It has 15,078 petrol pumps and 6,004 LPG distributors.
— With PTI inputs
Updated Date: Oct 21, 2019 18:46:02 IST