Moneycontrol | No plans of divesting BPCL, focus on energy transition: Minister Hardeep Singh Puri

Feb 08,2023

The government is not looking to divest stake in state-run Bharat Petroleum Corporation Ltd or any other companies under the Ministry of Petroleum and Natural Gas, Union Minister Hardeep Singh Puri said in an interview to Moneycontrol on February 8.

On May 26, the government said that it has called off the ongoing process of strategic disinvestment of BPCL. The government said that the plan would be reinitiated after review. Since then, Puri has said in the past that BPCL divestment is not on the table “right now,” which led the D-street to expect that the divestment may happen in the foreseeable future. However, his statement to Moneycontrol suggests otherwise.

“No, BPCL (divestment) is not on the table. After our last experience, let me tell you, very frankly, BPCL has rendered human service. BPCL, IOCL and HPCL. Just imagine, we have 77,000 pumps in the country. Out of them, 22,000 are in the private sector. In the private sector, some pumps were not selling at the cushion rate. So now, nobody is talking about BPCL anymore,” Puri said.

The Union minister said that companies under his ministry are not being considered for divestment, adding, “Now, we are concentrating on green energy transition.”

The public sector Oil Marketing Companies (OMCs) did not revise price for petrol and diesel from  November 2021 to March 2022 despite steep rise in crude oil prices, which put their margin under pressure and led to these companies reporting losses in subsequent quarters.

The OMCs - Indian Oil Corporation Ltd, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd– can change the price of fuel sold at retail pumps every day to align it with international rates. The final retail price of petrol and diesel include components such as– price charged to dealer, dealer’s commission, excise duty levied by Centre and tax by states.

While excise duty rates are uniform across the country, taxes charged by states vary. Since the state-run companies did not change prices, private sector retailers also could not change prices but some of them reportedly cut supply to fuel stations to cut losses.

The Union government had ambitious plans to sell its entire 53 percent stake in BPCL to private players in 2021-22; the target was later moved to 2022-23 and eventually scrapped.

Potential buyers who showed interest — Anil Agarwal-led Vedanta Group, Apollo Global Management and private equity major I Squared Capital-backed Think Gas — could not tie up the funds required for the deal and two of them dropped out.

On April 22, Moneycontrol was the first to report, quoting Anil Agarwal, chairman of Vedanta Resources, that the government has decided not to go ahead with the privatisation plan.

The government is committed to its intent to privatise state-owned enterprises and push banking sector reforms, according to Union finance minister.