With privatisation of BPCL, HPCL, is govt handing RIL a monopoly?

New Delhi: If Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) are handed over to Reliance Industries Ltd (RIL), along with one or more foreign entities, RIL will monopolise the oil refining business in India, trade unions have warned. They have also warned that with the privatisation of BPCL and HPCL, the government will lose control over India's energy security and energy economy.

A document that has emerged out of a national convention of trade unions of oil PSUs held in Mumbai on October 26 has sounded an alarm bell with respect to the privatisation of BPCL and HPCL.

'It is almost certain that RIL will grab HPCL & BPCL'

"If the united strength of public sector workers and the joint trade union movement along with the truly patriotic democratic people of the country fail to stop the government from handing over the strategic public sector industries, particularly the oil and petroleum industries, so vital for the economic growth and protection of economic sovereignty of the country, it is almost a certainty that the Reliance Industries in collaboration with the one or more foreign oil giants named above shall grab the BPCL and HPCL very shortly," trade unions cutting across BPCL, HPCL, Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC), Numaligarh Refinery Ltd (NRL) said.

How will RIL end up monopolising the oil refining business?

The RIL's present refining capacity is 68.2 MTPA. "If BPCL and HPCL are captured by RIL, their total refining capacity will jump to around 120 MMTA and obviously RIL shall emerge as monopoly oil refining industry in our country," the document said. It must be noted that more than 75 percent of the Indian fuel marketing business is owned by three PSU OMCs — IOC, BPCL and HPCL. "Based on this strength even in the de-regulated fuel pricing regime, the government has scope to exercise some control on fuel pricing. But once BPCL and HPCL are fully privatised, surrendering the controlling power to RIL, one can easily imagine as to how the petroleum products price shall start skyrocketing in the country. Both the vital Energy Security and Energy Economy of India shall be fully under the grip of private oil giants from within the country and abroad," the document said.

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Does the government control fuel prices?

No. The government freed petrol price from its control in June 2010 and diesel in October 2014. As of now, it provides a limited subsidy on LPG and kerosene. However, since a major part of the market share rests with the three PSU OMCs, the government can ask them to absorb inflationary shocks in extreme cases, like it did in October 2018. In order to shield consumers from the double whammy of a falling rupee and rising oil prices, the government had asked OMCs to absorb a cut of Re 1 per litre of petrol and diesel.

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