To buy a 52.98 per cent stake in BPCL, the government has received 'multiple' expressions of interest in the bidding process of the fuel retailer.
The disinvestment process of country’s second largest fuel retailer, Bharat Petroleum Corporation Ltd has moved on to the second phase.
To buy a 52.98 per cent stake in BPCL, the government has received 'multiple' expressions of interest in the bidding process of the fuel retailer.
'Strategic disinvestment of BPCL now moves to the second stage after multiple expressions of interest have been received,' finance minister Nirmala Sitharaman tweeted.
The qualifying bidder will not only have a controlling stake in BPCL, but will also get access to 25.77 per cent market share in India's fuel retailing segment, along with 15.3 per cent of India’s total refining capacity.
BPCL operates four refineries in Mumbai, Kochi, Bina, and Numaligarh in Assam, with a combined capacity of 38.3 million tonnes per annum.
The government is selling its entire 52.98 per cent stake in India’s second-largest fuel retailer as part of plans to raise a record Rs. 2.1 lakh crore from disinvestment proceeds in 2020-21.
But, the BPCL share price has plunged by close to a fourth since the strategic sale was approved in November last year.
Who are the interested parties?
Mining conglomerate Vedanta has put in a preliminary expression of interest (EoI) for buying the government's stake in BPCL. A major foreign player too is said to be in the race.
Industry sources however have stated that two private funds have also submitted Expressions of Interest (EoI) for BPCL.
Global oil majors British Petroleum, Total, Rosneft, ADNOC and Saudi ARAMCO, who were said to be interested in investing, have not submitted EoIs.
Experts noted that given the low level of participation BPCL was likely to result in a low valuation.
Why has there been low interest?
Experts say the impact of the Covid-19 pandemic and subsequent crash in global crude oil prices has put a strain on the finances of most global oil majors.
The price of crude oil fell sharply as a result of the fall in the demand for petroleum products across the world as countries imposed sever restrictions on travel.
Planned investments by Saudi ARAMCO into Reliance Industries and the Ratnagiri refinery complex have seen delays.
What government can do?
Experts say government may rope in other public sector undertakings like ONGC and Indian Oil to participate in another round of bidding for BPCL if it doesn’t receive high enough valuation from the current set of interested parties.
Under the terms of the current bidding process, PSUs were not been permitted to participate in BPCL's disinvestment process.
An expert who did not wish to be quoted said that if a combination of ONGC and IOC acquire the government’s stake in BPCL at a higher premium than what is being offered by private sector players, they would likely witness a decline in their share prices.
Analysts said it was not likely that the government would put off the disinvestment process of BPCL because of a lack of interest as it needed the proceeds from the sale to shore up its fiscal deficit.
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 "BPCL disinvestment: Why bidding has been low?")
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