Union minister for petroleum and natural gas, Hardeep Singh Puri on Friday express disappointment with the investor community, citing the low valuation given to state-owned oil markets.
Puri said that the government might consider selling part ownership in oil companies in order to increase efficiency, though there is no plan to sell any holding as of now. He further clarified that BPCL is not on the block.
The minister pointed out that the three oil marketing companies (OMCs) together earned profits of ₹2.5 lakh crore in the past six years, yet their combined market value is the same as Swiggy and Zomato, which together posted losses of ₹24,000 crore.
“Indian Oil, HPCL, and BPCL (the three OMCs) together constituted 3.3 per cent of corporate India’s profit last year. And the market value is less than 1 per cent. So, we believe that we are undervalued,” Puri added.
A senior official said state ownership may cause investors to view such firms through a “prism,” noting that there is often a perception the government could sacrifice profitability to keep fuel prices low.
“…there has also been a perception that the government might take away profitability in order to make fuel prices much lower,” he said.
The union minister stressed that all the companies are, however, investing for the future, adding that state-owned oil and gas firms operate with full autonomy, unlike family-run businesses where promoters influence board decisions.
Government-owned companies provide stronger investment returns through dividend payouts, minister Puri said in Mumbai, noting that almost all state-run firms have paid dividends, unlike the largest private sector player which pays none.
Addressing under-recoveries on LPG sales, Puri stated that the companies have recovered the amounts on time, without complaints from executives.
He dismissed concerns over ethanol blending as “pure baloney,” noting the government has no plans to exceed the current 20% mix and that it does not affect engine mileage or longevity.
