No immediate plans to sell IOC pipeline division

Vol 23, PW 5 (16 Jan 20) People & Policy

IndianOil chairman Sanjiv Singh has firmly dismissed speculation that the BJP-led government of Narendra Modi has directed the company to 'sell off' its pipelines division.

Singh's clarification in a New Year's address to employees on January 1 (2020) came after he received a letter from the IndianOil Officers Association on December 20 (2019) demanding more information on reports published in the last edition of Petrowatch that the finance ministry and PMO had bypassed the oil ministry to issue an oral directive that IndianOil should sell its pipeline assets to help reduce the government's fiscal deficit. "He (Singh) told employees not to worry and that there are no plans to sell off the pipeline division," an IndianOil source who heard the speech tells us.

"But he did say IndianOil might have to 'monetise the department' either through converting it into a subsidiary company or by setting up a Special Purpose Vehicle." Our source adds this would enable private investors, finanancial institutions or VC funds to invest in the subsidiary or SPV but that ownership would remain firmly with IndianOil.

Another suggestion under consideration is that IndianOil invest its own money in laying future pipelines and recover the investment over time before selling them later, similar to the Build Own Operate Transfer (BOOT) model where projects are built and operated before ownership is transferred. "Nothing is clear yet," he adds.

"Everything is at a very preliminary stage."