Union Minister says BPCL privatization plan has been put on hold

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Union Minister for Petroleum & Natural Gas, Hardeep Singh Puri, announced on Tuesday that the plans to privatize Bharat Petroleum Corporation Ltd (BPCL), a state-owned company, have been put on hold. Puri stated in an interview with BT TV that high revenue-earning public sector undertakings like BPCL should not be sold.

“BPCL has generated more profit in the first three quarters than the expected amount from the stake sale,” Puri said upon assuming charge of the Petroleum and Natural Gas ministry. In the first half of the financial year 2024, BPCL recorded a net profit of over Rs 19,000 crore.

During the third quarter of FY2024, BPCL’s consolidated net profit experienced an 82% surge, amounting to Rs 3,181.42 crore, compared to Rs 1,747.01 crore in the same period of FY23. The company’s revenue from operations in Q3 FY24 was Rs 1.30 lakh crore, slightly lower than the Rs 1.33 lakh crore from the previous year.

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BPCL reported a consolidated net profit of Rs 4,789.57 crore for the fourth quarter of the financial year 2023-24, which marked a 30% decline from the previous year. In the same period last year, the profit was Rs 6,870.47 crore. The decrease in profit can be attributed to weakening margins and crude oil price volatility during the quarter. Additionally, BPCL’s revenue from operations declined marginally to Rs 1.32 lakh crore in the quarter ended March 31, compared to Rs 1.33 lakh crore in the previous year.

The privatization of BPCL, along with the privatization of Air India, was part of the NDA government’s disinvestment program in FY22. The government planned to sell its entire stake of 52.98% in BPCL, estimated to fetch Rs 45,000 crore in FY22. Expression of Interest (EoI) for the sale was invited in March 2020, with the process initially scheduled to be completed by March 2021.

Initially, global majors such as Saudi Aramco, Abu Dhabi National Oil Co, and Exxon Mobil showed interest in purchasing BPCL. However, none of them submitted initial bids to acquire the state-owned oil refiner.

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Currently, BPCL is in the planning stages of establishing a new 12 million metric tonnes per annum (MMTPA) refinery in India, as reported by the Economic Times. The state-run oil marketing company is expected to invest around Rs 50,000 crore in the project and is currently evaluating potential locations in Andhra Pradesh, Uttar Pradesh, and Gujarat.

Over the next five years, BPCL aims to invest Rs 1.7 trillion in various sectors, including oil refining, fuel marketing, petrochemicals, and clean energy. This investment includes Rs 75,000 crore for refineries and petrochemicals, Rs 8,000 crore for pipelines, and over Rs 20,000 crore for marketing.

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