The Government plans to sell 3 per cent stake in BPCL to raise Rs 1800 crore

Bharat Petroleum Corporation (BPCL) is the second largest Indian state controlled oil and gas company headquartered in Mumbai, Maharashtra. The Company operates from two refineries located at Mumbai and Kochi with a combined capacity of 21.5 million tones.  The company also operates in joint venture with Oman Oil at Bina in Madhya Pradesh, with a capacity of 6 million tonnes. BPCL has almost one fourth of the total petrol pumps in India, which is around 12809 petrol pumps.

The Government holds 54.93 per cent stake in the company. On Tuesday, Finance Ministry has moved a Cabinet note for inter-ministerial consultations for selling 2.16 crore shares in BPCL, through a public offer, which is around 3 per cent of the total number of shares of the company. Divesting 3 per cent stake will help the government keep its shareholding above 51 per cent and complying with the minimum strategic holding it has decided to keep in key public sector units. Divesting will help government to raise around Rs 1800 crore. BPCL is currently trading in the range of Rs 810 to 820 per share. If we take Rs 820 as the offer price, the stake sale will fetch the government around Rs 1778 crore.

In this fiscal the government is targeting dis-investment of Rs 69500 crore from stake sale in PSUs. Out of this, Rs 41000 crore is to come from the sale of stock in state-run companies and Rs 28500 crore from the disposal of residual stakes in erstwhile government-owned firms. Although the Department of Disinvestment (DOD), under the Finance Ministry, has got approval from Cabinet for selling minority stakes worth about Rs 50000 crore in a host of PSUs, it has only been able to divest stake in one company, Rural Electrification Corporation Limited (REC) so far this fiscal year and raised about Rs 1610 crores.

The Cabinet has also approved sale of 5 per cent stake in Oil and Natural Gas Corp (ONGC), BHEL and NTPC as well as 10 per cent each in Indian Oil Corp (IOC), NALCO and NMDC. As per the Public Enterprise Survey 2013-14, India has 234 Central Public Sector Enterprises (CPSE) of which 46 enterprises are listed.

As a result of the buzz created post the news of the government stake sale, shares of Bharat Petroleum Corporation (BPCL) slipped more than 2 percent and touched low of Rs 803 in NSE, intraday on Wednesday.