In order to meet there disinvestment target and to clear the long back taken decision by Atal Government, now modi government is planning to privatise BPCL (Bharat Petroleum Corp) and for this govt had quietly repealed the legislation that were in her way stopping it from its privatisation.
The story is associated long way back in around 2003 when Atal government (NDA) was planning to privatise BPCL as well as HPCL, they were planning to sell around 34.10% stake out of there 51.10% stake in HPCL along with management control. For this interest were shown by some of the giants like Kuwait Petroleum, Reliance Industries, BP plc of UK, Petronas of Malaysia but supreme court in its ruling in 2003 stated that HPCL and BPCL can only be privatise by amending law through which these 2 were privatise in parliament and thus the process goes into vain.
However, this Supreme court ruling does not applies now due to The repealing and amending act,2016 passed with president’s assent which main introductory reason was removing “incoherent and redundant laws”.
BPCL is an attractive buy option for some of the giants including Saudi Aarmco of Saudi Arabia to French giant Total SA which wants to enter worlds fastest growing economy and fuel retail market giving then 25% share of Indian fuel market.
BPCL was previously Burmah Shell which in 1976 got nationalised by an act of parliament while HPCL was incorporated in 1974 after the takeover and merger of ESSO standard and lube india ltd by passing ESSO (Acquisition and undertaking in India) act passed by parliament. HPCL last year was taken over by ONGC (Oil and natural gas corporation) as Govt of india undertaking for ₹ 36,915 Crore.
The Supreme Court had in September 2003 cited the ESSO (Acquisition of Undertaking in India) Act and the Burmah Shell (Acquisition of Undertaking in India) Act, 1976 and Caltex (Acquisition of Shares of Caltex Oil Refining India Ltd and all the Undertakings in India for Caltex India Ltd) Act, 1977 to rule that the government cannot privatize HPCL and BPCL without approaching Parliament for changing the Nationalization Act.
Now as the way for privatisation of BPCL is clear, we can see the disinvestment which is likely to be completed by 31st March next year.
The international credit rating agency Moody’s warned of downgrading BPCL to BA1, if government sold its stake to any private entity.
Now it will be interesting to see whether govt sell its stake to private player or state owned company rating will also be dependent upon that.