Govt may sell off BPCL ahead of HPCL

NEW DELHI: The government is likely to divest BPCL ahead of HPCL, instead of selling the two at the same time.
The disinvestment of Bharat Petroleum and Hindustan Petroleum may finally be initiated early next month. It is understood that BPCL’s disinvestment would gain priority, as the company is considered more attractive and has generated greater interest among foreign investors.
Besides, BPCL has a larger refining capacity with refineries in Mumbai, Kochi and Numaligarh along with a large network of retail outlets. BPCL has a refining capacity of about 19.5m tonnes per annum, compared to HPCL’s 13m tonnes per annum. Both PSUs have about 4,600 retail outlets. HPCL has a refinery in Mumbai and Visakhapatnam.
It is almost certain that the disinvestment ministry would stagger the two divestments to ensure maximum realisations. BPCL could fetch the government at least Rs 5,000-crore, which would make it more than three times bigger than the biggest divestment so far.
HPCL’s disinvestment would have to await a resolution of its dispute with the AV Birla group over control of the 6m tonnes per annum Mangalore Refineries and Petrochemicals.
MRPL is a joint venture between HPCL and the AV Birla group with each holding 37.5 per cent each. Meanwhile, MRPL has already applied to the petroleum ministry for a restructuring package.
The disinvestment will, therefore, have to wait for resolution of these two issue. Industry sources say that global oil majors Shell and Exxon-Mobil are keen to acquire refining capacity in South Asia. Shell is understood to be very keen on acquiring control of BPCL. Incidentally, BPCL was a Shell company prior to nationalisation in January 1976.
Market speculates that Reliance may not be too keen on bidding for BPCL, as it already owns a large refining capacity on the west coast where BPCL’s refining capacity is concentrated.
The road map for the BPCL-HPCL sell off is likely to be discussed at the next meeting of the Cabinet Committee on Disinvestment (CCD) which is tentatively scheduled for next week.
A CCD meeting on February 5 had given in-principle clearance for disinvesting the government’s stake in the two oil PSUs. The panel, however, had not decided on the quantum of shares to be offered to a strategic investor.
The parade for selection of global advisors is expected to be scheduled for the first fortnight of June.
The Ministry of Disinvestment had earlier scheduled presentations by about 18 merchant banks and consultants for April 13 and 15, but called it off for want of consent of the Petroleum Minister Ram Naik to the plans for diluting stake in BPCL only to a strategic investor.
Naik had suggested the adoption of a two stage divestment in BPCL — first float a public offer to reduce its stake in the PSU to 51 per cent from the existing 66 per cent and then offer 25 per cent to a strategic investor.