Nationalisation of Oil companies in India

My Dear Young Indians,

Indian does not have sufficient reserves of crude oil hence we have to import around 80% of our requirements.

After independence we had foreign-private companies importing and selling petroleum products in India- Petrol, Diesel, Kerosene, Lubricants etc.

These companies were Esso Standard, Lube India Ltd, Caltex, Burmah Shell and some smaller companies.

In 1959, the Govt of India created its own company to import crude oil or petroleum- The Indian Oil Corporation Limited (IOCL).

In the 1970s two more Oil Companies were incorporated- Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation (BPCL)

 

What was the need to create new Govt companies in the same sector ?

This is what happened……

In 1971 India went to war with Pakistan which came to an end on 16 December 1971 when Pakistan accepted its defeat and surrendered to India. A new country Bangladesh was created.

Before and during the war, India had asked oil companies to increase supplies of oil in India. The Indian Armed Forces needed more oil to run its war machines. At the same time the rest of the economy had to keep running as usual and oil was crucial.

The foreign oil companies operating in India did not comply with requests of the Govt of India. The reasons why they went against Indian interests could be the covert pressure from USA and other western countries.

The then President of USA- Richard Nixon- and his Secretary of State- Henry Kissinger- had a pathological dislike for India. During the war, USA supported Pakistan and had even helped them by dispatching the Seventh Fleet of US Navy to assist Pakistan. (However, the Indian Armed Forces wrapped up the war in just 13 days even before the US Navy could reach Indian Ocean. They had to return home mid-way !)

USA- a dominant economic and military power then - headed by Richard Nixon pressurized oil companies to squeeze oil supplies and cripple India during the war.

In response to the anti-India conduct of the foreign oil companies, in 1974 the Indian operations of ‘Esso Standard’ and ‘Lube India Ltd’ were taken over by the Govt of India and renamed as Hindustan Petroleum Corporation Ltd (HPCL). In 1976, 1978 and 1979 Caltex Refining and some smaller foreign oil companies were taken over and merged with HPCL.

Takeover by the Govt means that the Govt forcibly buys a business by paying a monetary compensation to the present owner. The Govt is authourised by the parliament of India to do this. "Esso (Acquisition of Undertakings in India) Act 1974" was passed in the parliament which authorized the Govt to take over the business of oil company ‘Esso’. Separate acts have to be passed to takeover each entity.

In January 1976, business of ‘Burmah Shell Oil Company’ was taken over by the Govt of India and renamed as Bharat Petroleum Corporation Limited (BPCL).

This is the reason why we have three public sector oil marketing companies in India.

 

Jai Hind !

Gaurav Negi