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India’s second largest state-owned oil marketing company Bharat Petroleum Corporation Limited (BPCL) has been in talks with GAIL (India), country’s largest gas distributor, to purchase a majority of government’s stake in latter, reports Mint.
People aware of the development told the financial newspaper that talks are in the initial stage and the government is yet to approve the plan.
Both the companies enjoy 'Maharatna' status conferred by the Centre that may result in some premium payable to the government.
The company finds GAIL as a perfect match to expand in the gas sector with a ready market and will create an integrated oil and gas giant.
The Centre has approved the merger of the third largest state-oil marketing company Hindustan Petroleum Corporation Limited (HPCL) with ONGC, after the Finance Minister Arun Jaitley’s Budget announcement about creating an integrated oil company.
The Hindu reported on September 13 that BPCL aims to be ranked among the top 25 energy companies in the world, quoting BPCL Chairman D Rajkumar.
Current market capitalisation of BPCL is around Rs 1.08 lakh crore, while GAIL India has a market cap of around Rs 64,000 crore.
BPCL and GAIL India already have a business tie-up in the city gas distribution through joint ventures like Indraprastha Gas, Central UP Gas, Maharashtra Natural Gas and Goa Natural Gas.
BPCL Chairman D Rajkumar told reporters at post-annual general meeting press conference on September 12 that the company intends to invest Rs 1.08 trillion to expand operations across business segment in the next five years.
The company has won 5 city gas distribution licences for North Goa, Saharanpur, Yamunagar, Rohtak and Rupnagar in the sixth round held by the Petroleum and Natural Gas Regulatory Board (PNGRB). North Goa city distribution bid was won jointly by BPCL and GAIL.
The company has posted a revenue of Rs 2.42 lakh crore and a profit of Rs 8,000 crore for the financial year 2017.
If the Centre approves BPCL merger with GAIL India — it will help the government to achieve its divestment target of Rs 72,500 crore for the financial year.
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