BPCL Falls Post Government's Mega Privatization Plan
State-owned oil refining and marketing major Bharat Petroleum Corporation Limited (BPCL) fell 2 per cent on Thursday, a day after the government approved a divestment plan in the oil marketing company. At 11.45 am, the stock of the Navratna company had slipped from its intra-day high of Rs 549 and was trading at Rs 534, lower by 2% on the BSE. Among the other listed divestment candidates, Shipping Corporation has shaved off 4.3% at Rs 65 and Container Corporation of India (Concor) was trading flat, with a positive bias, at Rs 580.
Finance Minister Nirmala Sitharaman had announced late evening on Wednesday that the Cabinet Committee on Economic Affairs (CCEA) had approved the sale of government stake in five major . Central Public Sector Enterprises (CPSEs) - BPCL, Shipping Corporation of India (SCI), Container Corporation of India (CONCOR), THDCIL, and NEEPCO, and will hand over management control in each of these companies to the strategic buyer. Ms Sitharaman further added that BPCL's subsidiary, Numaligarh Refinery Ltd (NRL) in Assam will be hived off to another government oil company due to its geo-strategic importance. Among these five divestment candidate approved by the government, BPCL is the most lucrative as it has attractive valuations and stable business outlook; this, despite the government's plan to segregate the Numaligarh refinery.
The government had earlier announced plans to sell national carrier Air India as it attempts to tide over tax shortfalls of around Rs. 2 lakh crore and adhere to the fiscal deficit target of 3.3 per cent of gross domestic product (GDP) for the current year. The government has set a target of raising Rs. 1.05 lakh crore ($14.6 billion) through the sale of state stakes by March 2020.
In a related development, Saudi Aramco, which kicked off the final phase of its $25 billion IPO on Sunday, has been uncommittal on purchasing a stake in BPCL as it is reportedly focusing on purchasing a 20 per cent stake in Reliance Industries' oil to chemical division.
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