Opening the FDI will lead to quicker privatization (Representational Image)
The winning bidder, foreign or domestic, will end up with the refining, marketing and exploration assets of BPCL.
The Union Cabinet is likely up to approve 100 per cent foreign direct investment (FDI) in the Bharat Petroleum Corporation (BPCL), according to sources at CNBC Awaaz. This move will see the state-run oil company seeking complete privatisation by the end of this financial year according to reports. The government, which owns a 52.98 per cent stake in the company is rolling out the divestment process of its holdings in an effort to raise R 1.75 lakh crore in proceeds in FY22.
The main aim of this FDI route is to jumpstart the divestment process according to reports. With the government looking to completely divest their stake in the state-run oil company, it should be noted that private refineries are allocated for complete FDIs. On the other hand, Public Sector Undertakings (PSUs) are subject to around 50 per cent shareholdings in their structure with the centre holding the majority stake. Due to these rules and regulations, there is a requirement for some changes to the guidelines, the CNBC Awaaz report noted.
By opening up the FDI, the hope is that it will improve the chances of quick privatisation by a third party as this will lend towards the government’s plan of asset monetisation. The private bidder who wins will end up inheriting the refining, marketing and exploration assets of BPCL.
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Source: News18