The Indian government will likely delay the privatisation of state refiner Bharat Petroleum Corp. Ltd. (BPCL) until the next fiscal year, in a move that could hurt the country’s efforts to reduce a swelling fiscal deficit, Reuters reported citing a government document and sources. India’s fiscal deficit has breached its target level in the fourth month of the ongoing fiscal year. Industry analysts in 2019 estimated the government could raise $8 billion to $10 billion from the sale of its 53.29% stake in BPCL.
The government’s plan to sell stake in BPCL is part of a wider privatisation push which include spinoffs and stake sales in dozens of state-owned companies. The delay is expected to hinder India’s ability to generate funds for stimulus efforts aimed at helping the economy recover from the coronavirus pandemic. New Delhi initially aimed at finalising the sale in the current fiscal year at the end-March. However, mobility restrictions prevent potential buyers from visiting and inspecting BPCL facilities, prompting a two-month extension in the deadline for initial expressions of interest.
The privatisation also faces domestic opposition. The state government of Kerala, where BPCL operates its 300,000 bpd Kochi refinery, plans to challenge the sale in the Supreme Court, amid fears of job losses.
Global oil majors, such as Aramco and Rosneft, have indicated an interest in BPCL stake sale. However, BPCL shares have decreased by 20% since the privatisation was announced in November 2019, and interests may have waned amid a downturn in the energy industry amid the pandemic and transition toward low-carbon energy sources.
