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IOC, BPCL, HPCL in talks to raise ₹5,500 crore by securitising licence fee


New Delhi: Indian Oil, Bharat Petroleum and Hindustan Petroleum are discussing plans to raise ₹5,500 crore by securitising the licence fee they get from their petrol pump dealers as part of the government’s push for asset monetisation by state companies, according to multiple people familiar with the matter.

Top company executives at three state-run refiners have discussed the monetisation plan with officials at Niti Aayog and the petroleum and finance ministries for months, they said. Indian Oil is targeting to raise ₹2,500 crore while BPCL and HPCL are aiming for ₹1,500 crore each by securitising the licence fee for three years and selling the securities to banks or other buyers, according to the companies’ plans.

The licence fee is linked to the volume of petrol and diesel sold at a pump and is settled between a dealer and the company each fortnight or month. The licence fee for diesel and petrol varies from ₹ 128 per kilolitre to ₹369 per kilolitre based on the location of the petrol pump. A goods and services tax (GST) of 18-28% also applies to the licence fee.

Indian Oil, BPCL and HPCL didn’t respond to ET’s request for comment for the story. A source close to Indian Oil, who didn’t want to be named, said the idea of monetising licence fees was first discussed last year when fuel retailers were making losses following a spike in international fuel prices and were looking to raise cash through innovative means. While the plan to monetise licence fees is on the table, the urgency to execute it has reduced as companies are now flush with cash due to record-high profits in the first half of the current fiscal year, the person said. Compared to Indian Oil, BPCL and HPCL appear keener on the plan to monetise licence fees, another person with knowledge of the matter said.

The government has been pushing state-run oil companies for years to monetise their assets to raise resources that can be deployed in new projects.

Three years ago, the government had drawn up a plan, which expected state oil and gas companies to transfer some of their pipelines to InvITs and sell minority stakes in those to raise Rs 17,000 crore. The plan didn’t take off as the companies said they could raise capital from lenders at a much lower cost than the return they may have to offer to InvIT investors.


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