Government hopeful BPCL strategic sale to sail through without further extensions

After four extensions, the government is hopeful that strategic sale of Bharat Petroleum Corporation Ltd. (BPCL) may go through without any further need to postpone the bidding deadlines.

The deadline for submitting the Expressions of Interest (EoI) for 52.98 per cent stake in the BPCL is ending on November 16. Prior to this, the bid start date was September 30, but it got postponed due to bidders' request in wake of prevailing situation arising out of Covid-19 pandemic.

BPCL disinvestment has received interest from several large global oil and gas companies and a few Indian entities as well. In fact, the process so far has generated close to 100 enquiries in a clear signal that investors remain interested in the maharatna oil PSUs despite the disruptions caused by Covid-19 pandemic, official source privy to the development said.

According to them, Abu Dhabi National Oil Co (Adnoc), Exxon Mobil intend to participate in the bidding process for the PSU. Indian oil majors are not behind their global counterparts and are also actively pursuing the prospects of bidding for BPCL. Oil-to-telecom major Reliance Industries is understood to have shown interest for the bid.

Reports, however, suggest that world's largest oil producer Saudi Aramco and Rosneft of Russia may not participate in the bid due to soft oil prices and fragile demand conditions.

The deadline for submitting EoIs has been postponed four times and the current deadline ends on November 16. We are confident that EoI will sail through within time with several interested bidders coming into the fray, the sources quoted above said.

While the queries about the sale is a reflection of interest that BPCL disinvestment has, it does not always amount to investment. But the queries relating to timing to complete the bids, net worth requirement, what kind of controls investors may have to face, will they have to operate in regulated regime or how the money would have to be brought for the purchase, had given confidence that investors remain serious about BPCL.

On its part, disinvestment department had issued several clarifications to investors and eased several processes to make the sale attractive.

The disinvestment in BPCL involves the government selling its entire 52.98 per cent stake in the company to a strategic investor with transfer of management control. The government has barred PSUs from bidding for BPCL and expects private sector Indian players and global MNCs to bid for its stake.

The Indian government proposes to disinvest its entire shareholding in BPCL comprising 1,14,91,83,592 equity shares held through the Ministry of Petroleum and Natural Gas, which constitutes 52.98 per cent of BPCL's equity share capital, along with the transfer of management control to the strategic buyer (except BPCL's equity shareholding of 61.65 per cent in Numaligarh Refinery Ltd. (NRL) and management control thereon).

The shareholding of BPCL in NRL will be transferred to a Central Public Sector Enterprise operating in the oil and gas sector under the Ministry and accordingly, is not a part of the proposed transaction.

The government's stake in BPCL is worth around Rs 50,000 crore at BPCL's current share price.