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India weighs selling the state’s majority stake in Bharat Petroleum Corporation (BPCL), the country’s second-largest state-owned refiner, to an international oil company, Bloomberg reported on Friday, quoting people with knowledge of deliberations.
As India is currently assessing ways to give up direct majority control in BPCL, it is willing to attract international oil companies to its refining and fuel retail market that is dominated by local companies, Bloomberg’s sources said.
India’s government plans to sell its entire more than 50-percent stake in BPCL, Indian outlet Business Standard reported earlier this month.
According to Business Standard, however, the most likely buyer would be state-controlled Indian Oil Corporation.
A possible merger between BPCL and IOCL would be the third major deal of combining state-held enterprises over the past three years, excluding mergers in the banking sector, Business Standard says.
If the deal succeeds, a BPCL and IOCL merger would follow the merger between the Oil and Natural Gas Corporation (ONGC) and Hindustan Petroleum Corporation (HPCL) in 2017-2018 and the REC-Power Finance Corporation (PFC) deal in 2018-2019.
In its second term in office now, the Indian government of Prime Minister Narendra Modi is looking to book proceeds from divestments of stakes in state-held firms in order to curb budget deficit.
India’s government is considering relinquishing direct control over some of the biggest energy firms, although the indirect state participation will remain at above 51 percent, Atanu Chakraborty, who is responsible for the asset sale department at the government, told Bloomberg in July. The likely candidates for the government cutting its direct stake to below 51 percent could be Oil and Natural Gas Corp, Indian Oil Corp, NTPC Ltd, and GAIL India Ltd, Chakraborty told Bloomberg.
India’s Oil Minister Dharmendra Pradhan, for his part, said in early July that there wasn’t any proposal for a merger of state-owned oil and gas firms currently under review at the ministry.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.