BPCL delay throttles selloff ambitions
The Centre’s decision to extend the deadline for the BPCL selloff has put a question mark on the Narendra Modi government’s ability to achieve the ambitious disinvestment target of Rs 2.10 lakh crore set for the current fiscal.
The BPCL stock plunged 7.63 per cent to Rs 419.10 on the BSE on Thursday after the last date to accept expressions of interest (EoIs) for the sale of the government’s 52.98 per cent stake in PSU got extended by two months to September 30.
Finance minister Nirmala Sitharaman in her budget had said the government plans to garner Rs 1,20,000 crore from selloffs in PSUs and another Rs 90,000 crore from the sale of stakes in banks and financial institutions.
The ambitious target depends heavily on proceeds from the strategic disinvestment in public sector companies such as Bharat Petroleum Corp Ltd, Container Corp and Shipping Corp, along with the listing of insurance behemoth Life Insurance Corp of India.
Based on current market prices, it was estimated the BPCL selloff could fetch as much as Rs 70,000 crore to Rs 80,000 crore.
“The budget assumption on disinvestment may have to be revised in the changed circumstances. A call would be taken at an appropriate time,” finance ministry sources said.
Analysts said the lower-than-expected disinvestment collection would have an impact on the fiscal deficit.
“These exceptions may well be justified given the extraordinary situation created by the global pandemic.
These also point to weaknesses in the monetary and fiscal policy frameworks since these were not designed to cope with such structural economic breaks as posed by a calamity like Covid-19,” said D.K. Srivastava, chief policy adviser of EY India.
Sources said giants such as Saudi Aramco, Abu Dhabi National Oil Co (Adnoc), Rosneft of Russia, Exxon Mobil and RIL are likely to participate in the bidding process. But it is unclear whether the whole process would go through within the financial year, they said.
The government is proposing strategic disinvestment of its entire shareholding in BPCL comprising 114.91 crore equity shares along with transfer of management control to a buyer, except BPCL’s equity shareholding of 61.65 per cent in Numaligarh Refinery Ltd.