Cabinet approves strategic sale of BPCL and 4 other PSUs


Finance Minister Nirmala Sitharaman said privatisation of BPCL will be without the company’s equity shareholding of 61.65% in Numaligarh Refinery in Assam


The government will offload its entire 53.29 per cent stake in BPCL


The Cabinet Committee on Economic Affairs on Wednesday approved the strategic disinvestment of the Centre’s entire stake in Bharat Petroleum (BPCL), Shipping Corp, THDC India, and NEEPCO, and most of its stake in Container Corp, while giving up management control in these companies.


It also gave an in-principle approval for the government to reduce stake in certain state-owned companies to below 51 per cent in some while retaining majority stake management control.


These major divestment decisions were taken even as the government races against time to meet its highest ever divestment target of Rs 1.05 trillion for 2019-20. The Centre hopes that disinvestment proceeds will make up for some of the revenue shortfall that is expected this year.


The Numaligarh Refinery will be carved out of BCPL and will be taken over by another state-owned company, said Sitharaman. Numaligarh Refinery is the largest producer of paraffin wax in the country. The GRM of NRL during FY19 was seen at $11.8 a barrel. The remaining 38.35 per cent stake is held by the Assam government (12.35 per cent) and Oil India (26 per cent).


Of the total 249.4 million tonne per annum (MTPA) refining capacity in India, BPCL has around 15 per cent or 38.3 MTPA. BPCL also has 15,177 retail outlets in India.


The major reason why Numaligarh was kept out of the strategic disinvestment was because of its importance being part of the Assam Accord of 1985 signed between All Assam Students’ Union and the Centre following the anti-immigrant agitation.


The government will offload its entire 53.29 per cent stake in BPCL, 63.75 per cent stake in Shipping Corp, and 30.8 per cent stake in Container Corp, she said. The centre owns 54.8 per cent stake in Concor.


At Wednesday’s closing price, the value of BPCL stake sale was about Rs 63,000 crore, more than half the divestment target for the year. The combined proceeds from the Concor and Shipping Corp privatisation could be about Rs 12,900 crore.


Sitharaman also said NTPC will buy the Centre’s entire stake in two unlisted companies, THDC India and NEEPCO. The Centre owns 74.23 per cent in THDC, with the rest owned by Uttar Pradesh. It owns 100 per cent stake in NEEPCO.


While the Department of Investment and Public Asset Management is appointing transaction advisors and asset valuations for these deals, the centre’s internal calculations show that NTPC’s acquisition of the companies could fetch the exchequer around Rs 8,000 crore.


“The CCEA has given the clearance or in-principle approval for enabling the reduction of government of India paid up share capital in certain CPSEs while retaining management control,” Sitharaman said.


This move is different from an outright privatisation as the centre will continue holding a majority stake and management control in these firms and they will still be classified as public sector enterprises.