New Delhi: The ‘haste’ being shown by the Bharatiya Janata Party (BJP) government’s proposal to privatise the well-performing public sector entity, Bharat Petroleum Corporation Limited (BPCL), giving no reasons for it, seems aimed at meeting its ambitious disinvestment target for the year.
It was recently reported that the Narendra Modi-led government had “quietly repealed the legislation” that had nationalised the company, overriding the obligation to seek parliamentary assent before selling it.
Concerned about these developments, BPCL employees have been holding protest demonstrations, warning the government that the move would lead to “private monopolies” in the oil and petroleum sector, even as global players are already eyeing the Indian petroleum market.
Recently, news agency PTI reported that the Repealing and Amending Act of 2016 had annulled “187 obsolete and redundant laws lying unnecessarily on the Statue-Book” including the Act of 1976 that had nationalised erstwhile Burmah Shell. “The Act has been repealed and there is no need for Parliament approval for strategic sale of BPCL,” a senior official was quoted as saying.
In 2003, when the then BJP-led National Democratic Alliance government headed by Prime Minister Atal Bihari Vajpayee was keen on privatising BPCL, as well as Hindustan Petroleum Corporation Ltd (HPCL), the Supreme Court had ruled that the companies could be privatised only after Parliament amended the above mentioned law.
As reports over privatisation of BPCL have been doing the rounds for some time now, worried employees have held several protest demonstrations across states where BPCL units are located. In addition, several BPCL employees associations, including Cochin Refineries Officers Association, BPC MSA Mumbai Refinery Division, NRL Officers Association and BPCL Marketing Officers Association, have wtitten a letter to the Prime Minister Office (PMO) detailing their concerns. BPCL has over 12,500 permanent employees.
“There is a concern and fear among officers on the interest and business model that private players would be adopting. We even fear that post-privatisation, there may be policy decisions that may impact refinery operations and job security of officers,” the employees associations’ letter stated.
The letter added that BPCL had contributed to the petroleum sector and its “privatisation may have an adverse impact on our nation, as private players will be inclined on profit maximisation, ignoring energy security and social inclusiveness in delivery of services.”
The letter also said, “There is also concern on how the privatisation would be impacting the various verticals that BPCL has ventured into BRPL and other joint ventures. We fear private players may exploit BPCL’s robust and widespread marketing network to bleed IOCL and HPCL, eventually making these CPSEs sick in few years.”
The employees’ unions also stated that the net profit of BPCL for the last five years had been between Rs 5,000-8,000 crore and the entity had invested more than Rs 50,000 crore in various projects, which were now capitalised without time or cost overruns in the past five years.
BPCL has four refineries located in Assam, Kerala, Madhya Pradesh and Maharashtra with a combined capacity to convert 38.3 million tonnes of crude oil into fuel. It has 15,078 petrol pumps and 6,004 LPG distributors. The government has 53.23% stake in the company and 25% is held by public shareholders.
The BPCL website highlights the company as India’s ‘best performing’ Maharatna Public Sector Undertaking, and its journey from being an oil and gas company in India to a Fortune 500 oil refining, exploration and marketing conglomerate.
BPCL registered a net profit of Rs 7,132 crore in 2018-19, slightly less than Rs 7,919 crore in 2017-18. However, the government has not mentioned why it wants to sell the entity despite its profits, except for its disinvestment target of reaching of Rs 1.05 lakh crore.
On the other side, global players are eyeing to expand their footprint in India’s petroleum sector. In 2017, Russia controlled Rosneft and Trafigura-UCP consortium acquired Essar Oil, which had a refining capacity of 20 MT, a 1,000 megawatt captive power plant and 3,500 fuel stations for $12.9 billion (around Rs 83,000 crore). And this year, Saudi Arabian government's company, Saudi Aramco, has announced investment of Rs 1.05 lakh crore to acquire 20% stake in the refining and petrochemical business of Reliance Industries (RIL).