HPCL and BPCL receded on Friday as the clouds of uncertainty still loom large over their divestment what with major political opposition proving tenacious.

The concerted opposition, in fact, may at least delay the divestment of the two oil refiners if not waylay that entirely, according to reports. This reckoning saw HPCL dip 2.99% to Rs 277.10 and BPCL fall 2.45% to Rs 226.75 by 10:20 IST on BSE. Volumes on the two counters amounted to over 310,000 shares and 13,542 shares, respectively.

Dealers think that the solid political opposition (including that from members of the ruling NDA) as well as the approaching national elections should force the government to put off its divestment agenda for the time being.

The Supreme Court had earlier issued a notice to the Centre over the divestment proposal of the state-run oil refiners and retailers. The notice followed a public interest litigation filed with the SC by the Centre for Public Interest Litigation terming the divestment as illegal. CPIL contends that the government's decision to divest stake in HPCL and BPCL did not have parliamentary approval.

HPCL and BPCL, which together command a 40% petro market share, were nationalised through an Act of Parliament in the 1970s and CPIL contends that divestment in these two companies could be done either by repealing or amending the acquisition Acts concerned and that there was no other way of going about it.

Contending that Parliament was supreme in the constitutional scheme of things, the petition said no executive action could be taken in violation of parliamentary enactments.

Earlier, the Centre announced plans to offload stake in BPCL through the initial public offer route and the privatisation of HPCL through a strategic sale.

As per plans, 34.01% of HPCL's equity would be sold to a strategic partner and 5% to the company's employees. The Centre was to retain 12% holding in the company. Currently, the Centre's stake in HPCL is at 51.01%. In respect of BPCL, the Centre plans on an IPO involving 35.2% stake, 5% will be reserved for company employees. The Centre will retain 26%.

HPCL has about 4,600 retail outlets and a 20% market share in retailing petroleum products. BPCL has about 4,500 retail outlets and a 20% share in the petroleum products market. As per recent reports, BPCL plans to double its refining capacity to 2,40,000 bpd from the current 1,30,000 bpd by October 2004, and modify its refineries so that it can process different grades of oil. The total cost of the expansion and modernisation is estimated at Rs 1,831 crore (Rs 18.31 billion), of which Rs 1,200 crore (Rs 12 billion) has already been spent.

For the third quarter ended 31 December 2002, HPCL registered a gigantic 444% rise in net profit to Rs 330.62 crore on a 28% jump in net sales to Rs 14,210.23 crore (Rs 142.1 billion). BPCL recorded a net profit of Rs 233 crore (Rs 2.33 billion), up 224% over the Rs 71.90 crore it registered in the corresponding period of the previous year. Net sales increased by 29% to Rs 12,645.2 crore (Rs 126.45 billion) from Rs 9,801.1 crore (Rs 98.01 billion) in DQ 2001.

BSE code: 500104