Way Clear For BPCL Privatisation As Its Nationalisation Act Was Repealed In 2016
The Narendra Modi government had in 2016 quietly repealed the legislation that had nationalised Bharat Petroleum Corporation Ltd., doing away with the need to seek the Parliament’s approval for selling off the oil refiner to private and foreign firms.
The Repealing and Amending Act, 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 "The Act has been repealed and there is no need for a Parliament approval for strategic sale of BPCL," a senior official said.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 multinationals in domestic fuel retailing, the government is planning to sell most of its 53.3 percent stake in BPCL to a strategic partner.
The BPCL privatisation will not only shake up the fuel-retailing sector dominated by state-owned firms, but will also help meet a third of the government's disinvestment target for 2019-20. The government stake sale in BPCL could fetch up to Rs 60,000 crore, including a control-and-fuel-market-entry premium, officials said.
As on Friday, BPCL had a market capitalisation of Rs 1.11 lakh crore.
In September 2003, the Supreme Court had ruled that BPCL, as well as Hindustan Petroleum Corporation Ltd., can be privatised only after Parliament amends a law it had previously passed to nationalise the two firms.
The ruling came after the Atal Bihari Vajpayee-led National Democratic Alliance planned to privatise the two oil marketing companies.
Vajpayee’s government had wanted to sell 34.1 percent of its 51.1 percent stake in HPCL to a strategic partner, along with management control. Reliance Industries Ltd., BP Plc of the United Kingdom, 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But the Supreme Court-mandated condition is no longer applicable, the senior official cited above said, citing the May 9, 2016, Gazette notification following President's assent to The Repealing and Amending Act, 2016.
BPCL, previously Burmah Shell, was nationalised in 1976 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).
HPCL was incorporated in 1974 after the takeover and merger of erstwhile Esso Standard and Lube India Ltd. through the ESSO (Acquisition of Undertaking in India) Act passed by the Parliament. The company was in January last year taken over by state-owned Oil and Natural Gas Corporation Ltd. for Rs 36,915 crore.
India has a total refining capacity of 249.4 million tonnes, 65,554 petrol pumps and 24,026 LPG distributors.