PSUs may be barred from bidding for BPCL, HPCL

NEW DELHI: The Disinvestment Ministry has favoured banning all public sector undertakings from bidding for Bharat Petroleum and Hindustan Petroleum even as the Petroleum Ministry is understood to have sought the Prime Minister''s intervention for a public offering before strategic sale in the two PSUs.
The Disinvestment Ministry would soon seek the Cabinet Commitee on Disinvestment''s (CCD) nod to keep PSUs out of the race for acquiring stake in BPCL and HPCL in the same manner in which Indian Oil Corporation (IOC) was kept out, Ministry sources said.
The CCD had given in-principle clearance in February for divestment of HPCL and BPCL with the rider that IOC, which acquired petro retailer IBP Co Ltd, would be kept out of the process for ensuring competition between public and private sector.
The Disinvestment Ministry is also understood to be preparing a note on BPCL and HPCL disinvestment for CCD''s consideration, and the Ministry would seek the CCD''s nod for a time schedule for privatisation of the two oil PSUs.
The BPCL, HPCL divestment route has been hanging fire for the past few months and the Petroleum Ministry has sought Cabinet approval for public offering for a few oil companies including BPCL.
Petroleum Minister Ram Naik has sought an audience with the PM to make a presentation on the need for public offering of 50 million equity shares by BPCL to fund its expansion projects including Rs 6,000-crore Bina refinery.
The Disinvestment Ministry, on the other hand, appears to be opposing the move on the grounds that any IPO in either HPCL or BPCL would bring down the value of government equity in these two corporations that have been identified for privatisation.
The DoD is of the view that raising funds from markets should be left to the new strategic partner after disinvestment.
The Disinvestment Ministry in its comments on the Petroleum Ministry''s Cabinet note on BPCL''s IPO has said the IPO was a deviation from the February decision of the CCD and the issue should be raised and debated in the cabinet, sources said.
In BPCL, the government holds 66.2 per cent equity while mutual funds and UTI have 8.34 per cent. Banks, financial institutions and insurance companies have 7.03 per cent interest in BPCL while FIIs have 15.4 per cent stake. The remaining equity is with the public.
While the government holds 51.01 per cent in HPCL, mutual funds and UTI hold 14.43 per cent; banks, financial institutions and insurance compenies have 16.53 per cent and FIIs hold 10.79 per cent.The remaining equity is with the public.