BPCL privatisation may be pushed to next fiscal; no bidder approaches company in Q3, says official

Bharat Petroleum Corporation Limited's (BPCL) privatisation may have been put back to the following fiscal year as no bidder visited the firm's premises in the previous quarter, PTI reported quoting a company official.

India's second-largest oil refiner received three Expressions of Interest (EoIs) for the government's entire 52.98 percent ownership in BPCL, including one from billionaire Anil Agarwal's Vedanta Group.

Financial bids are yet to be called.

According to PTI, BPCL Director-Finance V R K Gupta said on a conference call with analysts that the company is continuing to update data for bidders in the government share auction and is also responding to their questions.

During the third quarter (October-December 2021) "no major events happened in terms of bidder visits to our company premises and the status quo is same", he said.
"We don't have any significant role in the disinvestment process," he said. "Whatever due diligence, data requirements are there, every quarter we update the data requirements in the portal, and bidders are continuously accessing the data.

"BPCL, he said, is updating information on the data room and replying to queries raised by the bidders.

"We are continuously updating, and we are getting some queries and we are replying, that process is on," he added.

His comment about no bids visiting the company's premises meant that the three bidders had either finished their physical due diligence or had taken a break for the time being, as per PTI mentioned.

In April 2021, BPCL created a virtual data room, featuring largely financial information about the firm, to which eligible bidders who signed a confidentiality obligation (CU) were granted access.

According to the agency (PTI), bidders were then able to physically view assets such as refineries and depots as part of the due diligence process, which included private equity companies Apollo Global and I Squared Capital's affiliate Think Gas in addition to Vedanta.

After bidders completed due diligence and the terms and conditions of the share purchase agreement (SPA) were agreed, the government was to solicit financial bids.

According to sources, certain commercially sensitive data is uploaded in a different portion of the data room known as the 'Clean Data Room,' with access limited to the qualifying bidders' approved legal teams for the sake of confidentiality and data abuse prevention.

Gupta said the government has indicated that privatisation might not happen before March, and may even get pushed to the next financial year, as per PTI reported.

"Yesterday (in the Budget) also they have indicated that it might not happen before March 2022, it may be pushed to the next financial year," he said.

BPCL privatisation needs to achieve certain milestones before financial bids are called. A floor price for the bidding needs to be set and a sale-purchase agreement needs to be finalised.

"There are some milestones that have to achieve before calling for the financial bids. That entire process is being carried out by DIPAM only. From our side, whatever data we have to provide on a quarterly basis we have to provide the data and we have to reply to the query," he added.

Before the deadline on November 16, 2020, a special purpose entity formed by BSE-listed Vedanta Ltd and its London-based parent Vedanta Resources Plc made an expression of interest to purchase the government holding in BPCL.

According to PTI, while I Squared Capital focuses on worldwide infrastructure investments, Apollo Global Management, Inc is a global alternative investment manager located in New York.

In North America, Europe, and select high-growth markets such as India and China, I Squared Capital invests in energy, utilities, transportation, and communications projects.

The buyer will possess around 15.33% of India's oil refining capacity and 22% of the fuel marketing stake, according to BPCL.

The company's buyer would receive 35.3 million tonnes of refining capacity, which includes a 12 million tonne Mumbai refinery, a 15.5 million tonne Kochi refinery, and a 7.8 million tonne Bina refinery, as per PTI mentioned.

In addition, BPCL has nearly 19,000 petrol outlets, 6,166 LPG distributor agencies, and 61 of the country's 260 aviation fuel stations.

According to PTI, the company also has an upstream presence in nine countries, including Russia, Brazil, Mozambique, the United Arab Emirates, Indonesia, Australia, East Timor, Israel, and India, with 26 assets.

It's also branching out into municipal gas distribution, with 37 licences under its belt (GAs).