BPCL disinvestment gets going with multiple EOIs, Reliance stays away

Aramco also not in fray; actual number bids not revealed but sources say three of four have been received

The long-awaited privatisation process for Bharat Petroleum Corporation (BPCL) is finally moving to its second stage with at least three to four companies submitting expressions of interest (EoIs). The government had to extend the deadlines for submission of EoIs four times before setting the final deadline on Monday.

The sale is crucial for the government in order to meet its disinvestment target of Rs 2.1 trillion for the current fiscal year. The government has not revealed the number of bidders. Union Finance Minister Nirmala Sitharaman tweeted that strategic divestment of BPCL has progressed to the second stage after multiple expressions of interest have been received. With this, the NDA government would be making its first privatisation in the petroleum sector after the Atal Bihari Vajpayee government sold IPCL to Reliance Industries (RIL).

A person aware of the development indicated to Business Standard that around three to four players have shown interest. Reliance Industries, however, did not put in a bid, nor did its partner Saudi Aramco. Russian state-owned Rosneft, which part owns Nayara Energy, the promoter of erstwhile Essar Oil refinery at Vadinar, is also believed to have kept out of the race.  

A Press Trust of India report said a clutch of private equity funds and/or pension funds are said to have put in EoIs. A lot of investors had conveyed lack of interest in BPCL due to the requirement of $10 billion net worth for putting in a bid. Also, state-run companies were not allowed to participate in the process.  

“We have received multiple EoIs. We are not supposed to divulge names and the number of bids. There will be no extension of the bid deadline and we are moving on to the next stage,” Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management, told Business Standard. 

The transaction advisor will now evaluate the EoIs after which companies will be shortlisted for submission of final bid price.

The Cabinet had approved the sale of the government’s entire 52.98 per cent stake in BPCL in November last year. Offers seeking EoIs were invited only on March 7. Based on the current market cap of Rs 89,525.06 crore, the value of 52.98 per cent stake in the company is expected to be around Rs 47,430 crore. For investors, around 35.3 million tonne of refining capacity, 16,492 retail outlets, and 72 million LPG customers will be on offer.

The government's plan is to sell its entire shareholding in BPCL comprising 1.15 billion equity shares, with the transfer of management control to a strategic buyer, excluding the company's 61.65 per cent in the Numaligarh Refinery in Assam.

The stake in Numaligarh refinery is expected to be sold to another public sector undertaking. A consortium of Oil India and Engineers India has shown interest in taking up BPCL’s 48 per cent stake in Numaligarh. The remaining stake would be sold to the government of Assam, to increase the state's share to 26 per cent in the venture. N Vijayagopal, director (finance) of BPCL, said the data room for Numaligarh stake sale was open. On the other hand, the company is also looking to buy the stake of Oman Oil Company in Bharat Oman Refineries.