BPCL's Lankan retail plans hit roadblock

Bharat Petroleum Corporation Ltd's (BPCL) plans to begin oil retailing in Sri Lanka have hit a roadblock with trade unions in the island nation threatening strikes if the Indian firm was given approval to buy 100 petrol stations.

The Bharat Petroleum Corporation Limited chairman, S Behuria, was in Colombo late last week to sign a memorandum of understanding for taking 100 petrol stations of Ceylon Petroleum Corporation and one-third of the country's storage infrastructure, but the deal could not go through as Ceypetco trade unions went on a flash strike against the move.

"The unions are against privatisation and more so, against bringing in another Indian firm after Indian Oil Corporation last year took over 100 CPC petrol stations. Under pressure, the Lankan government may even scrap the deal," industry sources said.

The unions feel that with BPCL's entry, Sri Lanka would lose control over its oil sector to India.

Bharat Petroleum Corporation Limited, which was the second highest bidder for the CPC pumps, was called for negotiating after the highest bidder, China's Sinopec, refused the offer of only 49 per cent ownership of the petrol stations along with management control.

While its winning bid of $88 million was for majority ownership of the petrol pumps, Colombo changed the rules after the new government, which had stated that it was against privatisation.

BPCL had bid $81 million for the pumps, while HPCL bid $77 million. IOC had paid $75 million dollars.

Sources said the Indian embassy in Colombo, too, has called for BPCL to back off its bid due to the build-up of strong anti-India feelings in the island nation.