Friday, May 13, 2022

BPCL privatisation on back burner, SCI sale to be reviewed: Report

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  • The government has put the privatisation of BPCL on the backburner for now, while a review of SCI will be undertaken shortly to move forward with the transaction
  • With an energy transition towards renewables being fast-tracked by several nations, the appetite for BPCL has been waning

New Delhi: The turbulence caused by the COVID-19 pandemic and the Russia-Ukraine war has led the government to do some rethinking on some of its big-ticket privatisation plans, like Bharat Petroleum Corporation Ltd (BPCL) and Shipping Corporation of India (SCI). According to a report published in The Times of India, the government has put the privatisation of BPCL on the backburner for now, while a review of SCI will be undertaken shortly to move forward with the transaction.

Right before the COVID-19 pandemic broke out, the government had announced its plans to disinvest BPCL, SCI and Container Corporation of India (CONCOR). Later on, defence PSU Bharat Earth Movers Ltd (BEML) was also added to the list. However, all these transactions have been facing delays for the last two years.

‘No forward movement on BPCL privatisation’

With an energy transition towards renewables being fast-tracked by several nations, the appetite for BPCL has been waning, said the report. “The situation has changed. There is a move to solar and other clean energy. We have to take a call but at this moment, there is no forward movement,” an official aware of the development was quoted as saying. BPCL was once considered a centrepiece of the government’s privatisation drive, with some estimates pegging the yield from its sale at Rs 70,000 crore. The government holds 52.98 percent stake in India’s second-largest oil retailer.

SCI privatisation: Govt to take decision soon

“We will undertake a review of the process soon and examine all the issues,” the report said quoting the official. Like BPCL, SCI privatisation process has also faced several delays over the last two years due to bidders seeking repeated extensions in timelines. The shipping PSU has also announced a plan to de-merge its non-core assets, in line with government’s directions, which could further delay the disinvestment process, said the report. The government holds 63.74 percent stake in SCI. 

For the current financial year, the Department of Investment and Public Asset Management (DIPAM) has set a target of raising Rs 65,000 crore from disinvestment. For now, the government is focussed on launching the Initial Public Offer (IPO) of Life Insurance Corporation (LIC). While the LIC IPO has been delayed because of the Russia-Ukraine war, officials are hoping that the IPO hits the markets by the first week of May. In the backdrop of the pandemic and the war, the government has slashed the valuation and the issue size, said the report.

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