Indian BPCL Proposes to Merge with Gail

Indian state owned refiner and oil marketing company Bharat Petroleum Corporation (BPCL) has written to the oil ministry proposing its integration with Gail and Oil India, Indian oil minister Dharmendra Pradhan said in Rajya Sabha, the lower house of the parliament, December 20.

“Oil and gas public sector undertakings (PSUs) including Bharat Petroleum Corporation Limited (BPCL) had written to the ministry in this regard. BPCL had written for integration with Gail (India) and Oil India Limited (OIL) as option 1 and 2 respectively. However, the government has not taken any decision in this regard,” he said in reply to a question from a member of parliament.

Indian finance minister Arun Jaitley in the budget speech delivered February 1, 2017, stated that “we see opportunities to strengthen our CPSEs [central public service enterprises] through consolidation, mergers and acquisitions. By these methods, the CPSE can be integrated across the value chain of an industry. It will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders. Possibilities of such restructuring are visible in the oil and gas sector.”

Jaitley added that the government proposes to create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies. Earlier this year, the government approved the sales of its entire 51.11% stake in Hindustan Petroleum to another state owned oil and gas company ONGC.