Govt to decide on HPCL, BPCL sale plan

MUMBAI: Divestment secretary Pradip Baijal on Thursday said that the government will decide within the next ten days, the privatisation strategy to be followed for HPCL and BPCL, two of the largest oil refiners and distributors in India, and the next big-ticket items on the government''s disinvestment agenda.
The government has been trying to decide whether to make a public offer of shares before a strategic sale of its stake in the two oil PSUs, or to simply sell a stake to strategic partners.
“If it''s decided to go for a stake sale, there will be no public share sale as it will be left to the strategic partner if and how to raise additional money,� Baijal said.
Shares of HPCL and BPCL, who each have about 20% of the $15bn domestic retail oil market, went up after this announcement. On the BSE, BPCL closed at Rs 309, up almost 7% from the opening price of Rs 289, while HPCL went up by 4.2% to Rs 301.
The government had earlier said that in the case of Nalco, the strategic sale will happen simultaneously with a public issue though the actual strategic sale will happen once the public issue is complete. There is a possibility that the same methods will be followed in case of HPCL, BPCL. At the same conference, a top official of Punjab government said that advertisements soliciting bids for a stake in three state companies will be appearing in the next two weeks.
“The three state companies, Punjab Tractors, Punjab Communications and Punjab Alkalies and Chemicals, are on the fast-track privatisation list,� said Mukul Joshi, principal secretary of the Punjab government’s department of industry and commerce. While the first two are profit making companies, Punjab Alkalies has been making losses for a few years. Scrips of all three state PSUs went up on hearing this news. While Punjab Tractors closed at slightly below Rs 164, up 17%, Punjab Communications and Punjab Alkalies went up 20% and 10% closing at Rs 11.5 and Rs 1.4.
The precarious financial situation of the “pretty bankrupt� state government is the motivating factor behind the move.
The divestment secretary, however, did not sound too pleased about the rate at which privatisation was proceeding. “We are privatising at about 1%, which is pathetic,� said Baijal. Calling it the ‘Hindu rate’ of privatisation, he went on to explain that despite privatising at such a slow rate, “the government is saving about Rs 1,200 crore per year� by not having to run these dismally performing PSUs on money borrowed at high cost.