In the biggest privatisation drive ever, the Union Cabinet on November 20 approved the sale of the government’s stake in blue-chip oil firm BPCL, shipping firm SCI and onland cargo mover Concor as well as decided to cut shareholding in select public sector firms below 51 per cent to boost revenue collections that have been hit by the slowing economy.

The Cabinet Committee on Economic Affairs (CCEA) approved the sale of the government’s entire 53.29 per cent stake along with transfer of management control in the country’s second-biggest state-owned refiner Bharat Petroleum Corp Ltd (BPCL) after taking out Numaligarh refinery from its fold, said Finance Minister Nirmala Sitharaman.

It also approved the sale of the entire 63.75 per cent government holding in Shipping Corp of India (SCI) and a 30.8 per cent stake in Container Corp of India (Concor).

The government holds 54.80 per cent in Concor and will retain a 24 per cent stake post sell-off but without any veto powers or management say, said Disinvestment Secretary Tuhin Kanta Pandey.

Besides, the government will sell its entire holding in THDC India and North Eastern Electric Power Corp Ltd (NEEPCO) to state power generator NTPC, Sitharaman said.

The government holds 74.23 per cent in THDCIL and 100 per cent in NEEPCO.

However, the minister evaded a direct reply to the timeframe for the disinvestments and if the stake sale will happen during the current fiscal year ending March 31, 2020.

Pandey said that due process will be followed in privatisation and the timeframe will depend on market interest.

Parallelly, the Cabinet has also approved reducing the government’s stake in select PSUs such as Indian Oil Corp (IOC) to below 51 per cent. The management control will continue to be retained with the government after considering equity held by other state-owned companies in the divested firm.

The government currently holds 51.5 per cent in IOC and another 25.9 per cent through state-owned Life Insurance Corp of India (LIC), and explorers Oil & Natural Gas Corp (ONGC) and Oil India Ltd (OIL), and the government can potentially sell 26.4 per cent for about Rs 33,000 crore.

A similar formula can also apply to ONGC and gas utility GAIL India Ltd.

The stake sales are critical for the government to meet its disinvestment target of Rs 1.05 lakh crore set for the current fiscal year.

The government’s 53.29 per cent stake in BPCL is worth about Rs 63,000 crore going by its closing price of Rs 544.65 on the BSE.

At current prices, the government’s 30.8 per cent stake in Concor is worth about Rs 10,800 crore, while the stake sale in SCI will fetch just over Rs 2,000 crore.

Last year, the government had sold its entire stake in Hindustan Petroleum Corp Ltd (HPCL) to ONGC for Rs 36,915 crore.

BPCL will give buyers ready access to 14 per cent of India’s oil refining capacity and about one-fourth of the fuel marketing infrastructure.

The firm operates four refineries in Mumbai, Kochi in Kerala, Bina in Madhya Pradesh and Numaligarh in Assam with a combined capacity of 38.3 million tonnes per annum, which is 15 per cent of India’s total refining capacity of 249.4 million tonnes. After removing 3 million tonnes capacity of the Numaligarh refinery, the new buyer will get 35.3 million tonnes of refining capacity.

It also owns 15,177 petrol pumps and 6,011 LPG distributor agencies in the country. Besides, it has 51 LPG bottling plants. The company distributes 21 per cent of petroleum products consumed in the country by volume as of March. BPCL also has more than a fifth of the 250 aviation fuel stations in the country.

The government is keen to get energy majors such as Saudi Aramco, Total and ExxonMobil to operate in the downstream fuel marketing business so as to bring in greater competition.

Currently, 95 per cent of retail petrol and diesel sales and near 100 per cent of LPG and kerosene sales are controlled by PSU firms.

India is the fastest-growing energy market in the world, where the global oil giants are keen to gain a foothold.

As of March 31, BPCL reported cash and cash equivalents of around Rs 5,300 crore, against Rs 10,900 crore of debt maturing over the next 15 months.

Sitharaman said the Numaligarh refinery will be handed over to the public sector oil company to allay the concerns of people in the Northeast over the privatisation move.

BPCL’s equity shareholding of 61.65 per cent in Numaligarh Refinery Ltd (NRL) and management control will be transferred to a Central Public Sector Enterprise (CPSE) operating in the oil and gas sector, she said.

“The resources unlocked by the strategic disinvestment of these CPSEs would be used to finance the social sector / developmental programmes of the government benefiting the public. The unlocked resources would form part of the Budget and the usage would come to scrutiny of the public,” a statement said.

“It is expected that the strategic buyer / acquirer may bring in new management / technology / investment for the growth of these companies and may use innovative methods for their development,” it added.

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