Union Minister for Petroleum & Natural Gas, Hardeep Singh Puri, announced on Tuesday that plans to privatize Bharat Petroleum Corporation Ltd (BPCL) have been put on hold. In an interview with BT TV, Puri explained that high revenue-generating public sector undertakings, like BPCL, do not need to be sold.
“BPCL has made more money in the first three quarters than the stake sale amount,” Puri remarked, as he took charge of the Petroleum and Natural Gas ministry. BPCL reported a net profit of over Rs 19,000 crore in the first half of the financial year 2024.
Financial Performance
In the third quarter of FY2024, BPCL reported an 82% increase in its consolidated net profit, reaching Rs 3,181.42 crore compared to Rs 1,747.01 crore in the same period the previous year. Revenue from operations was Rs 1.30 lakh crore in Q3 FY24, slightly down from Rs 1.33 lakh crore a year earlier. Total expenses decreased to Rs 1.26 lakh crore in the October-December period of fiscal year 2024, compared to Rs 1.31 lakh crore in the same quarter last fiscal year.
On May 9, 2024, BPCL announced a consolidated net profit of Rs 4,789.57 crore for the fourth quarter of FY2023-24, marking a 30% decline from the previous year’s profit of Rs 6,870.47 crore. This dip in profit was attributed to weakening margins and volatile crude oil prices. Additionally, BPCL, along with other oil marketing companies, had reduced diesel and petrol prices by Rs 2 per liter in mid-March, impacting the company’s margins. Revenue from operations slightly declined to Rs 1.32 lakh crore for the quarter ended March 31, compared to Rs 1.33 lakh crore in the previous year.
Previous Privatization Plans
The privatization of BPCL was part of the NDA government’s disinvestment program for FY22, alongside Air India. BPCL, India’s second-largest oil marketing company, has refineries in Mumbai, Kochi, and Madhya Pradesh, giving it the third-largest refining capacity after Reliance and Indian Oil. The government planned to sell its entire 52.98% stake in BPCL, expected to fetch approximately Rs 45,000 crore. Expression of Interest (EoI) for the sale was invited in March 2020, with an initial target to complete the process by March 2021. Although global majors like Saudi Aramco, Abu Dhabi National Oil Co, and Exxon Mobil showed initial interest, none submitted bids to purchase the state-owned refiner.
Expansion Plans
BPCL is currently planning to establish a new 12 million metric tonnes per annum (MMTPA) refinery, as reported by the Economic Times. The project will involve an investment of around Rs 50,000 crore, with potential locations being assessed in Andhra Pradesh, Uttar Pradesh, and Gujarat. Over the next five years, BPCL plans to invest Rs 1.7 trillion in oil refining, fuel marketing, petrochemicals, and clean energy. This includes Rs 75,000 crore for refineries and petrochemicals, Rs 8,000 crore for pipelines, and over Rs 20,000 crore for marketing.
