For BPCL disinvestment, govt may take a leaf out of Vajpayee’s book

New Delhi: Let's get the facts straight. The disinvestment of BPCL has been taken up by the government at a time when the global oil markets are subdued and the chorus to shift towards renewable energy and electric mobility is growing louder. Because of this, sources within state-run Bharat Petroleum Corporation Ltd (BPCL) have voiced concerns that the government's plan to offload its entire 53.29 percent stake in the PSU may be a bit too ambitious.

If the government were to offload its entire stake in one go, the deal could be worth around Rs 1 lakh crores.After taking stalk of the ground realities, it looks unlikely that global oil heavyweights like Saudi Aramco, Total, ExxonMobil et al, who could be potential buyers, would take a risk this big. And therefore, the Department of Investment and Public Asset Management (DIPAM) is looking to take a leaf out of former Prime Minister Atal Bihari Vajpayee's book. Vajpayee is credited with undertaking the most expansive drive to privatise PSUs in the history of India's public sector.

So, what's plan 'B' for BPCL disinvestment?

The plan is to do what Vajpayee did when he privatised Hindustan Zinc and BALCO — retain minority shareholding in the PSUs after sale and change of management control. The government could offload half or around 26-27 percent of its shareholding in BPCL in one go while retaining the rest. The Centre may then choose to exit the PSU at a later stage when the valuation improves after the strategic investor pumps more funds into the entity.

A notification released by DIPAM last month, seeking advisers for the sale of government's shareholding in a PSU in the Ministry of Petroleum and Natural Gas indicated that the Centre plans to offload its entire stake. However, sources have said that advisers have been asked to come up with two scenarios: one where an investor will pick up the government's entire stake and another where they will pick up half the stake and take management control along with majority shareholding.

ALSO READ: Here's what Ind-Ra thinks of BPCL stake sale

There's also a plan 'C'

In case none of this works out, the plan 'C' is the well-rehearsed plan that was followed in the case of the ONGC-HPCL deal. The Centre might ask Indian Oil to buy its stake in the state-run refiner, sources said. This route will allow the government to tend to the demands made by trade unions within BPCL who have been opposing the move aggressively.

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