Days before the Union Cabinet takes up a proposal to privatise state-owned BPCL, Petroleum Minister Dharmendra Pradhan on Thursday said the government has “no business to be in business”, and cited examples of telecom and aviation sectors where opening up had led to increased competition and price cuts to the benefit of consumers.
“When Prime Minister (Narendra Modi) says the government has no business to be in business, it is not a slogan. It is a philosophy,” he said. “Our PSUs have done a commendable job in the building of modern India and ensuring the availability of fuel to the common man. But the common man will benefit most when there is market competition.”
Pradhan said telecom and aviation sectors are shining examples of what competition can do for consumers. Opening up of these sectors to private players had led to a crash in phone call rates and internet charges and has provided more options and better services to travellers along with affordable airfare.
“This democracy is committed to the common man of the country. We have to create ease of living through more open and process-driven regulation. Product is important, who is running it is not important,” he said. “The government has no business to be in business.”
The government is keen to get international energy majors such as Saudi Aramco, Total SA of France and ExxonMobil to operate in the downstream fuel marketing business so as to bring in competition.
Currently, 95 per cent of retail petrol and diesel sales and near 100 per cent of cooking gas (LPG) and kerosene sales are controlled by the public sector units.
India is the fastest-growing energy market in the world and the global oil giants are keen to gain a foothold. Acquisition of BPCL, which has 15,177 petrol pumps out of a total of 65,973 outlets in the country, provides an excellent opportunity to gain one-fourth of the market share. The company distributes 21 per cent of petroleum products consumed in the country by volume as of March this year.
The company operates 38.3 million tonnes per annum of oil refining capacities at Mumbai, Kochi, Bina and Numaligarh, which is 15 per cent of India’s total refining capacity of 249.4 million tonnes.
BPCL also has more than a fifth of the 250 aviation fuel stations in the country. Pradhan refused to be drawn into timelines for stake sale in BPCL. “You will know when it happens,” he remarked.