With the Centre generating progress in the course of action of privatisation of fuel retailer-cum-refiner BPCL, the petroleum ministry will quickly seek Cabinet nod for a course of action to transfer subsidised LPG prospects from the business to other state-run retailers Indian Oil and Hindustan Petroleum Corporation to take away a possible irritant for the purchaser. The transfer course of action will be completed in three-five years. State-run fuel retailers typically do not acquire subsidies on time, lots of a time, the release of subsidy is delayed for years. After the decontrol of costs of auto fuels, the subsidies are now on account of cooking gas, kerosene and LPG connection to the poor beneath the Ujjwala Yojana.
At FY20 finish, such unpaid/delayed dues cumulatively stood at Rs 27,000 crore, roughly split amongst IOC, BPCL and HPCL in the ratio of 50:25:25. Once the business goes to private hands, such an arrangement will probably be resisted by the new owners. According to BPCL’s annual report for FY20, the business had unpaid/delayed dues of about Rs 425 crore compared with Rs 883 crore for FY19.
“As advised by the ministry of petroleum & natural gas, the corporation has accounted compensation towards sharing of under-recoveries on sale of sensitive petroleum products as subsidy from the government amounting to Rs 255.31 crore (previous year Rs 882.65 crore) and the same is accounted as revenue from operations. During 2019-20, an amount of Rs 169.69 crore recognised in the revenue from operations towards recoverable additional uncompensated costs against LPG sales,” BPCL mentioned in the annual report.
According to CNBC TV18, the oil ministry has decided to hold BPCL as ‘divested entity’ for three-five years to aid in continuation of LPG subsidy post stake sale. Vedanta has formally evinced interest for the Centre’s 52.98% stake in BPCL, which is on the block. While the government had confirmed receipt of “multiple expressions of interests” from domestic and foreign firms for the controlling stake in the oil important by the November 16 deadline, Vedanta is the initially possible bidder to confirm it is in the fray.
BPCL owns and operates 4 refineries in India and 15% share of the country’s 250 MT refining capacity it also has 17,000-robust retail fuel outlet network in the nation, and a more than quarter of the retail marketplace share. Its privatisation is observed as important for the government. The Centre is now generating a determined work to sell its stake in BPCL, which was worth about Rs 44,000 crore at Wednesday’s closing price tag on the BSE.
The government’s stake in BPCL was worth about Rs 60,000 crore in November 2019, about the time the stake sale proposal was authorized by the Union Cabinet. However, the actual receipts will rely on valuation and consideration of a premium (ONGC had purchased the Centre’s stake in HPCL in FY18 at a premium of 14% to the stock’s price tag). As per Sebi takeover code guidelines, an acquirer business has obligation to launch a mandatory open give for an more 26% stake in the target business.