Bharat Petroleum Corporation Ltd (BPCL) Current Affairs - 2020

Strategic Disinvestment of BPCL and 4 other PSUs

The Cabinet of PM Narendra Modi approved disinvestment of BPCL along with Shipping Corporation of India (SCI), Container Corporation of India (CONCOR), Tehri Hydro Development Corporation India Limited (THDCIL) and North Eastern Electric Power Corporation Limited (NEEPCO). The GoI has agreed to sell its stakes in the above PSUs

Highlights

The GoI plans to sell 53.3% of its stake of BPCL, 63.8% of SCI and 30.8% of CONCOR to strategic buyers. 74.2% of its stake with THDCIL and 100% of NEEPCO is to be sold to NTPC.

In the disinvestment process the Numaligarh Refinery Limited operating under BPCL is excluded.

Disinvestment plan

The Government had set a disinvestment target of 1.05 lakh crore rupees for the financial year 2019-20. So far, it has collected 17,364 crores as on November 18, 2019. The plan was announced in the Budget session of 2019.

Significance

Disinvestments are done to reduce the financial burdens on government due to inefficient PSUs. It helps to improve public finances. It also introduces market disciplines and competition that will help in depoliticizing non-essential services.

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Petrol and Diesel Prices to be revised Daily from June 16

State-run oil marketing companies such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) will revise the prices of petrol and diesel daily from June 16 throughout the country. The move is aimed at countering the practice of undercutting by private retailers as well as to bring India at par with the US oil market. Private retailers such as RIL and Essar are also expected to switch to the new pricing mechanism.

At present, State-run oil marketing companies revise rates of petrol and diesel on the 1st and 16th of every month by taking into account the average international crude price in the preceding fortnight and the currency exchange rate.

Significance

Daily revision of prices will insulate the retailers from volatility of global crude prices.

Daily revision of prices will result in small hikes rather than a steep rise which often attracts customer ire.

It has the potential to initiate a price war and bring competition in a market which is 95% dominated by the public sector retailers. it will give the state run retailers an opportunity to match private companies who have been undercutting them in a free market.

It will free the state run retailers from government interventions while fixing prices to suit political considerations. Although, technically public retailers have a free hand in fixing the prices of petrol and diesel, in practice political considerations often guide the public retailers.

 

Background

Government has decided to implement the model throughout the country following the success of the a month-long pilot run in Udaipur, Jamshedpur, Puducherry, Chandigarh and Vishakhapatnam from May 1.  In fact, the government has been planning for making daily revisions since 2012, but then the state run companies were not willing to implement citing lack of connectivity and infrastructure. Petrol pricing was freed from government control in 2010 and the diesel pricing was deregulated in 2014.

 

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