Oil ministry to oppose BPCL, HPCL selloff

NEW DELHI: The petroleum ministry which will be making a presentation in the next CCD meeting on the disinvestment of HPCL and BPCL is likely to oppose the sale of government equity in these companies at this juncture.
The involvement of defence minister George Fernandes in the whole issue and his proposal to go in for a public offering instead of a strategic sale has added a new twist to the controversy.
Although, the ministry is not against the divestment in these companies per say, it is felt that the sector needs more investments before these companies are sold off to private entities. Sources said that it has been argued in the presentation that the new players in the market need to bring in investments and help build strategic infrastructure before getting the marketing rights for products.
"BPCL and HPCL are well managed professional companies and given their marketing strength and the market potential in the country, these companies can always fetch a good price," sources said.
The government can instead go in for small tranches of divestments in other oil companies like ONGC, IOC and GAIL to mobilise funds.
Infrastructural requirements like pipelines, ports, LPG bottling units etc have to be met for the sector to keep pace with the projected demand of 6 per cent annually.
The government had made it mandatory that marketing rights will only be given those companies who commit to make investments of Rs 2,000 crore in the sector.