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Govt: Sale of BPCL or any PSU not based on its profitability

In the backdrop of protests against the sale of BPCL, the government has said that the profitability of a PSU is not a criteria for disinvestment
New Delhi: In the backdrop of protests against the sale of state-run BPCL, the government has said that the profitability of a PSU is not a criteria for deciding whether they would be taken up for disinvestment. The statement is significant as employee unions and associations opposing the sale of BPCL have time and again pointed out the profit earned by the Maharatna PSU to make their case. Responding to a question in the Rajya Sabha, Minister of State for Finance Anurag Singh Thakur said that the government should not be in business in sectors where competitive markets have come of age.

‘Profitability, loss not a criterion for strategic disinvestment of PSUs’

“The government follows a policy of strategic disinvestment of CPSEs, which are not in ‘priority sectors.’ For this purpose, NITI Aayog has been mandated to identify such CPSEs based on the criteria of (i) National Security, (ii) Sovereign function at arm’s length, and (iii) Market Imperfections and Public Purpose. However, profitability/loss of the CPSEs is not among the relevant criteria,” Thakur told the Upper House of the Parliament.

‘Govt has no business to be in business’

“Strategic disinvestment of PSUs is being guided by the basic economic principle that the government should discontinue in sectors, where competitive markets have come of age and economic potential of such entities may be better discovered in the hands of a strategic investor due to various factors such as infusion of capital, technological upgradation and efficient management practices. The success of the transaction depends on the prevailing market conditions and the investors’ interest,” the House was told.

Govt paid-up share capital in BPCL is Rs 1,048.15 cr

In a separate response in the Rajya Sabha, Thakur said, “The government’s paid-up share capital in BPCL is Rs 1,048.15 crore, which is equal to 53.29 percent of the total paid-up share capital of BPCL… The completion of the procedure and expected realisation from strategic disinvestment in BPCL will depend on the prevailing market conditions and the investor’s interest at the time of sale.”

The backdrop

The news comes as the general refrain emerging out of protests, strikes organised by the employees in the oil PSU sector continues to be based on BPCL’s profitability. In a first-ever press conference organised by the officers’ association of Maharatna companies, the officers said that the sale of BPCL would mean killing the golden goose because it has been paying hefty dividends to the government. However, the government seems to have rejected this criterion for deciding whether a PSU should be put up for sale or not.