By Dr. Gyan Pathak
Narendra Modi government’s calling off disinvestment of Bharat Petroleum Corporation Limited (BPCL) and the statement issued in relating to it thereafter is indicative of a disturbing undercurrent in the Indian Economy that should be a matter of great concern since what we are seeing might be only the tip of an iceberg because it is the third strategic disinvestment proposal to be called off in the current fiscal.
The Centre has to call off the strategic disinvestment of this oil marketing company, as it has been stated by the Union Government, is lack of bidders’ interest, while the Modi government was willing to sell its entire stake of 52.98 per cent in the company along with its management control to be transferred to the successful private sector bidder.
Theoretically, the proposal was considered by the Union Government to be a great temptation for the private sector companies that were supposed to be rushing to take over the BPCL. However, the presumption proved to be wrong. Private sector companies were perhaps scared of purchasing even the entire stake of the Union Government and also the power of full management control that the centre was willing to transfer to them.
What prevented the private sector companies in taking interest in Centre’s privatization move for the BPCL is a matter of greater concern for the economy which should be studied seriously because there might be some concealed disturbing undercurrent that have compelled the government to call off the process soon after it had to shelve the disinvestment programmes of two other Public Sector Companies Pawan Hans Helicopters Limited (PHHL) and the Central Electronics Limited (CEL), and that undercurrent might prove to be more dangerous that one can perceive at present.
The Department of Investment and Public Asset Management (DIPAM) had said in an update, “Based on the decisions of the Alternative Mechanism (empowered group of ministers), Government of India has decided to call off the present EoI (expression of interest) process for strategic disinvestment of BPCL, and the EoIs received from QIP (qualified interested parties) shall stand cancelled.” Though it has further stated that decision on the re-initiation of the process will be taken in due course based on review of situations, the enthusiasts of the privatization are in reality reconciling with the newly emerged trend in the Indian economy that has repelled the private sector companies from participating in the disinvestment process. The real causes behind the ‘repulsion’ are not known outside the official circle in the helm of affair.
Strategic disinvestment of Government’s shareholding in BPCL was approved in-principle on November 20, 2019, which excluded BPCL’s shareholding in Numaligarh Refinery (NRL). Further, as per the approval, BPCL’s shareholding in NRL was to be divested to a Central Public Sector. A global invitation was issued on March 07, 2020 for EoI.
DIPAM officials had said earlier that multiple EoIs were received and they also initiated due diligence of the company. However, now they have said, “the multiple Covid-19 waves and geo-political conditions affected multiple industries globally, particularly oil and gas industry. Owing to prevailing conditions in the global energy market, most of the QIPs have expressed their inability to continue in the current process of disinvestment of BPCL.”
It is clear that there is something in between the two statements in the present case and therefore the explanation provided by DIPAM for reasons to call off does not seem to reveal the whole truth, though the reasons brought forward are in themselves quite serious and they need urgent redressal. It is true that the market condition is general, and oil market condition in particular, is suffering primarily from external conditions, but domestic mismanagement of the situation is not less responsible for deterioration, which actually repelled all the companies barring only one left in the fray. It has been widely reported that just with one QIP left the government did not want to take any chances, and hence it preferred to call off the entire disinvestment process of BPCL for now.
Earlier the Centre had said that the strategic buyer would bring more funds and new technology into BPCL, and the new management would contribute in growth of BPCL to generate higher economic activity including growth of the ancillary industries. As a follow up to the new plan of the Centre, BPCL had already sold entire Investment in Equity Shares of Numaligarh Refinery. It has been sold to a consortium of Oil India and Engineers India, and to Government of Assam during the financial year 2020-21 at a total consideration of Rs 9,875.96 crore. However, the entire dream of the government has shattered though it says to renew its efforts at opportune time.
The new situation indicates that it is not now a simple question of failure or dilemma of the Modi government in pursuing its proposed disinvestment or privatization plan, but it transcends beyond to some greater threat to the economy in general affecting both the public and private sector. In depth study to assess the present external and internal predicaments is urgently required so that we can plan afresh before they go out of control. (IPA Service)