Friday, September 30, 2022

‘BPCL strategic sale akin to offering a marketing machine on a platter’

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New Delhi: In a letter addressed to Prime Minister Narendra Modi, the Federation of Oil PSU Officers (FOPO) have said that the BPCL strategic sale will be like giving “a fantastically engineered marketing machine on a platter to our competitors.”

“Technologically, infrastructure of BPCL is world-class and therefore, scope for incremental technological improvement by disinvestment is minimal. In the past two decades, BPCL has aggressively expanded its marketing network with a determination to remain competitive under all scenarios, thus disinvestment at this stage will be like giving a fantastically engineered marketing machine on a platter to our competitors,” Mukul Kumar, convenor of FOPO, said in the letter.

‘BPCL strategic sale could cause notional loss of Rs 4.5 lakh cr’

While terming the strategic sale of BPCL immensely non-remunerative and counter-productive, the oil PSU officers’ federation warned that if BPCL is sold off on the basis of its market capitalisation, then it would lead to a notional loss Rs 4.5 lakh crore. “Considering the current market capital capitalisation of BPCL (Rs 1.06 lakh crore approximately) and a 30 percent premium over the same (which is typical premium offered for Corporate buy outs), we understand that government has estimated a receipt of approximately Rs 74,000 crore through this disinvestment. However, in our opinion, this will lead to a notional loss to government of India of approximately Rs 4.5 lakh crore,” Kumar said.

This loss would be mainly due to systemic anomaly of valuing the growth and not the assets in inter-corporate asset transfers, the letter explained. At a press conference earlier this month, FOPO had claimed that the true value of BPCL would be Rs 9 lakh crore, using the replacement method listed by DIPAM in its request for proposal to engage an asset valuer.

Why sell a profitable PSU, asks FOPO

“Further we also humbly want to submit that disinvestment of a highly profitable Maharatna PSU is an action which is beyond our comprehension, especially because it is constituent of strategic energy sector,” the letter said. BPCL has paid a total dividend of Rs 17,246 crore to the government in the last five years, the letter pointed out.
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‘PSUs should be allowed to participate in bidding’

The FOPO also urged the Prime Minister to allow PSUs to participate in the bidding process for the strategic sale of BPCL and make way for an ONGC-HPCL kind of a deal. “Acquisition of BPCL by another public sector company, on the lines of HPCL, may be a better solution, as this would help the government of India raise the required finances, at the same time, this will also ensure that the government of India will continue to receive dividend income as well as prudent quantum of tax income,” the letter said.

“If this option is considered with favour, then it is suggested that collectives’ groups, ie association/union of employees and other stakeholders, eg dealers, distributors etc, may also be permitted to participate in the disinvestment process,” the letter added.

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