Why BPCL’s strategic sale does not need a Parliamentary approval

Ahead of a proposed transfer to totally privatise state-owned gasoline retailer Bharat Petroleum Corp Ltd (BPCL), the federal government had quietly repealed the laws that had nationalised the corporate, disposing of the need to hunt Parliament nod earlier than promoting it off to non-public and overseas corporations.

The Repealing and Amending Act of 2016 had annulled “187 obsolete and redundant laws lying unnecessarily on the Statue-Book” together with the Act of 1976 that had nationalised erstwhile Burmah Shell.

“The Act has been repealed and there is no need for a Parliament approval for strategic sale of BPCL,” a senior official mentioned.

Keen to get multi-nationals in home gasoline retailing to spice up competitors, the federal government is mulling promoting most of its 53.three per cent stake in BPCL to a strategic accomplice.

Privatisation of BPCL will not simply shake up the gasoline retailing sector lengthy dominated by state-owned corporations but in addition assist meet not less than a third of the federal government’s Rs 1.05 trillion disinvestment goal.

BPCL on the shut of market on October four had a market capitalisation of about Rs 1.11 trillion and a authorities stake sale may get upwards of Rs 60,000 crore together with a control-and-fuel-market-entry premium, officers mentioned.

The Supreme Court had in September 2003 dominated that BPCL, in addition to Hindustan Petroleum Corporation Ltd (HPCL), will be privatised solely after Parliament amends a regulation it had beforehand handed to nationalise the 2 corporations.

The ruling had adopted a plan of the then BJP-led NDA authorities headed by Prime Minister Atal Bihari Vajpayee to privatise the 2 corporations.

The apex courtroom ruling had stalled the plan to promote 34.1 per cent out of presidency’s 51.1 per cent stake in HPCL to a strategic accomplice together with administration management. Reliance Industries Ltd, BP plc of UK, Kuwait Petroleum, Petronas of Malaysia, the Shell-Saudi Aramco mix and Essar Oil had expressed their curiosity in buying that stake earlier than the Supreme Court stalled the method.

But the Supreme Court mandated situation is now not relevant, they mentioned citing the May 9, 2016, Gazette notification following President’s assent to The Repealing and Amending Act, 2016.

Besides others it listed repealing in “the whole” The Esso (Acquisition of Undertakings in India) Act, 1974, The Burmah Shell (Acquisition of Undertakings Act, 1976 and The Caltex [Acquisition of Shares of Caltex Oil The whole] Refining (India) Ltd and of the Undertakings in India of Caltex (India) Ltd] Act, 1977.

According to the Statement of Objects and Reasons for the Repeal Bill launched within the Lok Sabha on May 13, 2015, the thought was to convey reform within the authorized system by eradicating “incoherent and redundant laws.”

“…the present proposal is to repeal 187 obsolete and redundant laws lying unnecessarily on the Statute-Book. On being enacted, it would reduce obsolete laws and bring in clarity to those for whose benefit the laws are enacted,” it mentioned.

BPCL provides enticing purchase for firms starting from Saudi Aramco of Saudi Arabia to French vitality large Total SA that are vying to enter the world’s fastest-growing gasoline retail market. It will not solely give them 34 million-ton in refining capability but in addition entry to about 25 per cent share of India’s gasoline advertising and marketing.

BPCL was beforehand Burmah Shell, which in 1976 was nationalised by an Act of Parliament. Burmah Shell, arrange within the 1920s, was an alliance between Royal Dutch Shell and Burmah Oil Co and Asiatic Petroleum (India).

HPCL was integrated in 1974 after the takeover and merger of erstwhile Esso Standard and Lube India Ltd by way of the ESSO (Acquisition of Undertaking in India) Act handed by Parliament. The firm was in January final yr taken over by state-owned Oil and Natural Gas Corp (ONGC) for Rs 36,915 crore.

The Supreme Court had in September 2003 cited the ESSO (Acquisition of Undertaking in India) Act and the Burmah Shell (Acquisition of Undertaking in India) Act, 1976 and Caltex (Acquisition of Shares of Caltex Oil Refining India Ltd and all of the Undertakings in India for Caltex India Ltd) Act, 1977 to rule that the federal government can’t privatise HPCL and BPCL with out approaching Parliament for altering the Nationalisation Act.

“There is no challenge before this Court (Supreme Court) as to the policy of disinvestment. The only question raised before us whether the method adopted by the Government in exercising its executive powers to disinvest HPCL and BPCL without repealing or amending the law is permissible or not. We find that on the language of the Act such a course is not permissible at all,” Justice S Rajendra Babu and G P Mathur wrote within the September 16, 2003 order “restraining the Central Government from proceeding with disinvestment resulting in HPCL and BPCL ceasing to be Government companies without appropriately amending the statutes concerned suitably.”

BPCL operates 4 refineries at Mumbai, Kochi in Kerala, Bina in Madhya Pradesh and Numaligarh in Assam with a mixed capability to transform 38.three million tonnes of crude oil into gasoline. It has 15,078 petrol pumps and 6,004 LPG distributors.

India has a complete refining capability of 249.four million tonnes and 65,554 petrol pumps and 24,026 LPG distributors.

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