This is why BPCL privatisation may not happen in FY2019-20

New Delhi: With just three months to go for the financial year to end, official sources seem unsure that the BPCL privatisation deal will be completed before the end of financial year 2019-20. According to sources in DIPAM (Department of Investment and Public Asset Management), the document seeking Expression of Interest (EoI) for BPCL is expected to be out by February. "The biggest challenge for the government would be to realise the money from the BPCL privatisation deal before the end of March 2020," sources said. Another source said that for the government to offload its entire stake in BPCL and hand it over to a strategic player through privatisation would take at least a year, if due diligence is followed.

BJP oil expert says BPCL privatisation quite possible in FY20

Speaking to PSU Watch, BJP spokesperson and oil expert Narendra Taneja asserted that it is very much possible for the government to complete the deal before the end of this fiscal. "We have heard the announcement made by the Finance Minister. So, I think we have absolutely no reason to doubt that. When you make an announcement at that level, you do that after doing the homework. All national and international companies who are interested in BPCL are already doing their due diligence. The public sector company on offer is well known. The government intention is well known. So, I don't any reason to doubt what the government has said," said Taneja.

What happens if the BPCL deal does not take place?

Earlier in November, the government announced its decision to disinvest five state-run companies — BPCL, SCI, CONCOR, THDC and NEEPCO. Another PSU whose privatisation has been on the cards for a long time now is Air India. These six PSUs were to be divested in financial year 2019-20 in order to help the government raise an amount of Rs 1.05 lakh crore. However, going by the current pace of development, it looks the government will only be able to offload its shares in THDC and NEEPCO to NTPC before the end of March 2020.

The government has so far managed to raise Rs 17,364.26 crore via disinvestment. If the government's plan for disinvestment and privatisation of BPCL, SCI, CONCOR and Air India does not go as per schedule, it will leave a big gap in the Centre's budget. This could impair the government's ability to meet the fiscal deficit target of 3.3 percent of GDP. It must be noted that both direct and indirect tax collections for FY2019-20 have been well below targets and the economy has slumped to a meagre 4.5 percent in the September quarter.

The backdrop

Politically, the Bharatiya Janata Party (BJP) government at the Centre has been under stress because of widespread protests against the Citizenship Amendment Act (CAA) and National Register of Citizens (NRC). It has also suffered losses in Assembly elections in five states off late. The rising sentiment against the party could also prompt it go slow on its disinvestment plans.

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