Kerala is a loser in BPCL-KRL merger, say experts
The recent merger of Kochi Refineries Ltd (KRL) with Bharat Petroleum Corporation Ltd (BPCL) is considered by many experts here as a loss to Kerala.
"The State has lost a good company, which it could showcase before a prospective foreign investor as a well-managed establishment in the State and that opportunity is lost," some experts in the oil industry told Business Line.
Local identity lost
According to them, BPCL wants to go global and by merging with such a major company it (KRL) has lost its local identity. It has now become part of a bigger organisation having its corporate office elsewhere in the country and hence the local interest of the State is likely to be lost, they claimed.
When it was an independent oil refinery, with its corporate office here, it had certain commitments and was able to implement them for the benefit of the State, they said.
They are of the view that future expansion of the refinery, once the ongoing projects are completed, might not take place. For instance, BPCL is now putting up a grass-root refinery at Bina involving an estimated investment of around Rs 9,000 crore.
With the financial strength acquired by the company after the merger of the KRL and with the backing of the Government, it would be able to set up the new refinery as an independent subsidiary of BPCL, they said. "Cash from KRL would now flow out to such projects," they alleged.
The State’s interest would be in jeopardy after some time as the Kerala Government, perhaps, might not have a nominee on BPCL board.
"In fact, KRL was trapped in a well laid net," a former executive of the oil industry said. According to him, KRL was not given marketing rights by the Government and instead it was given to IOC and BPCL.
Meanwhile, the Centre had off-loaded its 55 per cent share worth around Rs 660 crore to BPCL. Following the opening up of the market and globalisation, there were apprehensions that without marketing the refinery might have to close down. This phenomenon scared the employees and officers for whom it had become a survival problem. In this situation, the officers and employees unions had given in writing that they wanted the merger, the experts said.
The employees are unlikely to have any problem and the refinery would operate as it is now and even better. But, the State would remain the loser, they said.
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