Former Chairman of IOC and BPCL Joins RIL Ahead of BPCL Disinvestment Drive

Amidst the disinvestment process of Bharat Petroleum Corporation Limited (BPCL), former chairman of Indian Oil Corporation (IOC) and BPCL itself, Sarthak Behuria, has joined Reliance Industries as an advisor. This development has come when the entire oil industry eagerly is waiting for the Centre to invite expression of interest for the sale of BPCL.

“Behuria will provide strategic direction and leadership to the new joint venture between RIL and British energy giant BP, focused on the fuel-retail business and also work closely with the Reliance Leadership team on various matters of strategic importance,” Reliance Industries said.

Behuria, who is considered to be one of the prominent faces in the energy sector, had taken over the post of Chairman of BPCL in July 2002 and he then played a pivotal role in transformation of BPCL. Focusing on the customers’ expectations, he transformed the retail operations of the public sector undertaking(PSU), BPCL. Along with this, Behuria was the mastermind behind the “Pure for Sure” campaign through which importance of the quality oil was being highlighted.

Again, during 2005-10, he served as the chairman of IOC and in those five years, the PSU marked a steady growth. Altogether, his initiatives in IOC drove it towards 100% increase in revenue growth.

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The analysts in the energy sector expect that the presence of this doyen would help RIL which is eyeing BPCL. Along with Mukaesh Ambani’s RIL, Vednata and global energy giants Saudi Aramco, Rosneft, Kuwait Petroleum, ExxonMobil, Shell, Total SA and Abu Dhabi National Oil Corporation are also likely to bid for the government’s stake in BPCL, said an earlier report.

These companies can bid for Centre’s 53.3% stakes in BPCL either individually or as part of a consortium. Though the disinvestment of BPCL had received an in-principle nod from the Cabinet Committee on Economic Affairs in November 2019, the process is expected to take place in the financial year 2020-21. Through this, the Centre aims to raise a large chunk of its disinvestment target—Rs 2.1lakh crore.

If we consider the case of RIL, it had outpaced in clocking the double digit sales growth in petrol and diesel from its nearly 1,400-odd petrol pumps in the third quarter ending in December 31. After announcing earnings for October-December 2019, Reliance, operator of the world’s largest oil refining complex, said that it registered 11% growth in diesel sales and 15% growth rate in petrol sales at its 1,394 fuel retail outlets.

This is significant when compared to the industry growth rate of 0.2% for diesel and 7.1% for petrol.

Its per outlet throughput at 342 kilolitres per month was also nearly double of that by the petrol pumps operated by public sector firms such as IOC and BPCL.

“Superior product mix and high asset utilisation underpinned strong earnings,” it said, adding that India’s oil demand grew by 3.2% in October-December with petrol demand rising by 7.1% and LPG demand surging by 15%.

In April last year, Reliance had agreed to sell 49% of its petro retail business to UK's BP plc for Rs 7,000 crore. Reliance-BP joint venture agreed to expand the network to 5,500 in the next five years and the same is expected to bid for BPCL as well.

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(Inputs from PTI)