Privatisation plans: Govt gets multiple expressions of interest from local, global firms for BPCL

The government has received “multiple expressions of interest (EoIs) from domestic as well as global firms” for 52.98% stake in state-run fuel retailer-cum-refiner BPCL, department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey told FE.

The deadline for submission of EoIs for BPCL was Monday.

While there has been no official word yet on the potential bidders for BPCL, many including Reliance Industries (RIL), Vedanta, Abu Dhabi National Oil Co, Saudi Aramco and ExxonMobil are believed to have been considering to acquire controlling interest in the country’s second-largest oil marketing company which has a market share of 21%. BPCL also has third-largest refining capacity in India.

RIL, which has a mega oil refining complex in Jamnagar, Gujarat, recently hired former BPCL chairman Sarthak Behuria and former Indian Oil chairman Sanjiv Singh.

Seven-and-a-half months into the fiscal, the Centre is now making a determined effort to sell its stake in BPCL, worth Rs 47,430 crore at Friday’s closing price on the BSE.

The government’s stake in BPCL was worth about Rs 60,000 crore in November 2019, around the time the stake sale proposal was approved by the Union Cabinet. However, the actual receipts will depend on valuation and consideration of a premium (ONGC had bought the Centre’s stake in HPCL in FY18 at a premium of 14% to the stock’s price).

BPCL’s share price closed at Rs 412.7 on the BSE on Friday, up 4.69% from previous day’s closing price.

The stake sale, expected to be completed this fiscal, is seen to fetch around Rs 70,000 crore to the exchequer. The BPCL sale is likely to be single-largest component of the Centre’s disinvestment receipts this fiscal, which is likely to be far below the ambitious Rs 2.1 lakh crore budgeted.

BPCL operates four refineries in India – Mumbai Refinery (1955), Kochi Refinery (1966), BORL-Bina Refinery (Bharat Oman Refineries, a joint venture between BPCL and Oman Oil Company) (2011), and Numaligarh Refinery (1999), with a combined crude oil refining capacity of 38.3 MMTPA (766 KBPD). BPCL’s stake in Numaligarh refinery will be sold to another CPSE oil firm separately.

Racing against time to conclude the privatisation of BPCL in the current fiscal itself, DIPAM had extended the EoI submission deadline for the fourth time by one-and-half months to November 16. A preliminary information memorandum (PIM) document for inviting EoIs for strategic disinvestment of BPCL was issued on March 7, 2020.

The Centre is banking on the sale of its entire stake in BPCL along with a clutch of other transactions to minimise a likely shortfall in its non-debt capital receipts from the budgeted level in the current fiscal. So far in the year, only Rs 6,138 crore, or just 3% of the annual target, has been obtained through disinvestments.