India Considers Selling Refining Stake to Overseas Oil Firm
(Bloomberg) -- India is considering a plan to sell the nation’s second-largest state refiner and fuel retailer to a global oil company as it explores options to give up its controlling stake in Bharat Petroleum Corp., people with knowledge of the matter said.
The government is keen to lure multinational companies in the domestic fuel retailing to boost competition and shake up a sector that’s long been dominated by state-run firms, the people said, asking not to be identified as the plan is not public. The Business Standard newspaper reported on Sept. 2 government’s plan to sell a majority stake in the company. It holds 53.3% in BPCL.
Prime Minister Narendra Modi’s government has set a record target of raising 1.05 trillion rupees ($14.8 billion) in the current fiscal year from sale of state firms. The government’s budget gap goal of 3.3% of GDP is at risk due to sluggish revenue collections on the back a growth slowdown, limiting the government’s ability to spend on infrastructure and welfare programs.
Offloading its holding in Bharat Petroleum can help meet more than 40% of the aim based on the closing price on Sept. 12. Finance ministry spokesman Rajesh Malhotra could not be immediately reached for a comment.
Shares of Bharat Petroleum gained as much as 7.1%, touching day’s high of 411.55 rupees in Mumbai. That compares with a 0.5% gain in the benchmark S&P BSE Sensex index.
The talks are at an early stage and it’s unclear how long it will take to finalize a decision and what option the government will choose, the people added. A move to privatize BPCL will parliament’s approval.
Saudi Aramco is targeting refining deals in India, while Russia’s Rosneft PJSC has already invested in oil refining and fuel marketing. Others such as Total SA, Shell and BP Plc are also expanding into fuel retailing in India. The International Energy Agency expects energy demand to more than double by 2040.
An earlier attempt to sell state refiners Hindustan Petroleum Corp. to a single investor and Bharat Petroleum to the public was stalled by a Supreme Court order in 2003 following protests by labor and political groups.
Bharat Petroleum was previously Burmah Shell, which in 1970s was nationalized 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).
To contact the reporters on this story:
Siddhartha Singh in New Delhi at firstname.lastname@example.org;
Debjit Chakraborty in New Delhi at email@example.com
To contact the editors responsible for this story:
Unni Krishnan at firstname.lastname@example.org
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.