Privatisation of BPCL: A Hazardous Sell-off
THE Narendra Modi dispensation, in its second term, is advancing its privatisation drive at a perilous speed. The government is on a selling spree getting rid of public sector industries, which are the backbone of our economy, one by one. The move to sell majority shares of the Bharat Petroleum Corporation Limited (BPCL) is the latest in the list. The Department of Investment and Public Asset Management (DIPAM) has already invited request for proposals from eligible parties to work as transaction and legal advisors, and asset valuers for five PSUs, including BPCL. The government seems to be on a fast-track mode on this proposal.
BPCL is one of the eight ‘Maharatna’ companies with 53.29 per cent of shares owned by the central government. It is India’s sixth biggest company. For the last 16 years, BPCL is one among the top 500 global companies listed by Fortune magazine. In 2017, the company received ‘Maharatna’ status, putting it in the category of government-owned entities in India with the largest market capitalisation and consistently high profits.
The company has a history dating back to the colonial days. Its predecessor was the Burmah-Shell Oil Storage and Distributing Company of India Limited established in 1928. In 1976, the company was nationalised under the Nationalisation of Foreign Oil Companies Act. On January 24, 1976, the Burmah-Shell was taken over by the Government of India and was renamed as Bharat Petroleum Corporation Limited.
Earlier, it was reported in the media that US oil giant Exxon Mobil Corp is buying BPCL shares. It was also suggested that the deal was the outcome of Modi’s much hyped Houston visit. But now it is being heard that the NDA’s “most favoured company” Reliance Industries Limited and the French energy company Total SA are in the forefront to buy BPCL shares.
Usually when the government wants a public sector company to be put on sale, an orchestrated media buildup will be there about the loss-making history of the company. The government as well as the spokespersons of the market forces enthusiastically would put forth this argument. But in this case, they are silent. No such argument will stand ground as the profit of the company had been on the rise through the years. It was Rs 5,085 crore in 2014-15 and Rs 7,138 crore in the last financial year.The contribution to the national income by the company had also been increasing, year by year. It was Rs 67,719.17crore in 2015-16 and rose to Rs 95,035.24 crore in 2018-19. The company has almost one- fourth share in the Indian oil market.
PERFORMANCE OF BPCL
Profit After Tax (in crores)
Crude oil Processed (in Million Metric Tons)
Market Sales (in Million
The government cites the present economic crisis as the reason for the sale of BPCL. But it is a well-known fact that in 2003 itself when the Atal Bihari Vajpayee-led NDA government was in power, the government attempted to privatise the company. However, following a petition by the Centre for Public Interest Litigation, the Supreme Court restrained the central government from privatising BPCL and Hindustan Petroleum without the approval of parliament. At that time, they did not have the majority in parliament to repeal the Nationalisation Act of 1976 to facilitate privatisation. So, they could not go ahead with the move. But in 2016, when the first Modi government came to power, they repealed the Act of 1976 that had nationalised erstwhile Burmah-Shell, doing away with the need to seek parliament nod before selling it off to private and foreign firms. Thus, it is evident that the government was planning this sell-off much before the present economic crisis.
It is a fact that the Indian economy is in deep crisis. But the central government is taking steps that would deepen the crisis further. As the CPI(M) Polit Bureau pointed out, what is required is to increase public investments in a big way and build our much-needed infrastructure while generating jobs and increasing the purchasing power of the people. But the government is moving in the opposite direction selling the national assets on one hand, and extending the looted money for the benefit of private corporates and speculative profit on the other.
Public sector in our country was an instrument to attain self-reliant economy and create the industrial base of the country. It played an important role in developing balanced regional growth. Dismantling public sector means subjugating our national economic interests, our economic independence and sovereignty to the interests of international finance capital, to imperialist interests.
The provocation to nationalise the oil industry in 1976 was the reluctance of the private oil firms to supply enough oil for the Indian defence during the Indo-Pak war of 1971. Thus, it is evident that the dominance of private sector in the oil sector is detrimental to the national interest. The imperialist forces always consider the fuel sector as a tool for their colonial designs. Ample examples are in evidence, one of the latest with the Latin American country Venezuela, where the USA used their economic assets in the fuel sector in their attempt to prevent the Left forces from coming to power there. This pattern of using oil as an imperialist tool was visible in Iraq, Libya and Syria and in its severe economic sanctions against Iran. The paltry amount of Rs 68,000 crore, the price fixed for the shares of BPCL, has also come under criticism. Market sources suggest that it is a huge undervaluation. They point out that even a loss-making company like Essar was sold for a much higher price. So, there is the smell of a scam also in the deal.
In Kerala, where one of the three refineries of BPCL is situated, the LDF government in power had announced a mega project to set up a petrochemical park in Kochi jointly with BPCL Kochi. The park is expected to house petrochemical units that can make use of the raw materials available from BPCL Kochi Refinery’s Propylene Derivative Petrochemical Project (PDPP). Kerala Industrial Infrastructure Development Corporation (Kinfra) is on the move to acquire more than 400 acres of land for the project. The state government has already acquired and transferred 176 acres of land for the PDPP of BPCL. Now the privatisation move may affect the future of the project. The government of Kerala is strongly opposing the move to privatise BPCL.
The workers in BPCL are already up in arms against the move to privatise the company. But it should not be left to the workers alone. The entire country must oppose such privatisation and disinvestment and sale of public sector enterprises.