Govt intends to complete BPCL disinvestment by March-end: Company chairman

Acquirer will have to make open offers to minority shareholders of Petronet LNG and IGL for 26% shares, costing new owner of BPCL another Rs 19,000 cr

The disinvestment of Bharat Petroleum Corporation (BPCL) is intended to be completed by March 2022 according to company Chairman, Arun Kumar Singh.

Speaking at a press conference after the Annual General Meeting of the company on Monday, Singh said, “The government at many forums and instances has said that it intends to complete the transaction within this financial year, this means by March 2022. So as of now, stated position is March.” He was responding to a query on when will the disinvestment of BPCL be complete.

In August 2021, Tuhin Kant Pandey, Secretary at the Department of Investment and Public Asset Management (DIPAM) said that the government plans to complete privatisation of Air India and BPCL this year.

But in the first week of September 2021, Fitch Ratings noted that there may be delays in BPCL’s privatisation. “Bidders are conducting due diligence, but uncertainty over the bidder consortiums and process complexity, including valuation, may lead to potential delays,” it said.

Vedanta, Apollo Global, and I Squared Capital had responded to the centre’s call for shedding its controlling stake in BPCL. The centre has 52.98 per cent shareholding in the public sector undertaking crude oil refiner and the prospective buyer may have to shell upwards of Rs 50,000 crores for the controlling stake at present valuation.

BPCL’s data room was opened in April 2021 to allow bidders access to financial data of the refiner and better assess the valuation.

Another aspect that requires clarity is regarding the BPCL stake in Indraprastha Gas (IGL) and Petronet LNG, in lieu of the imminent privatisation.

Responding to a query on the same, Singh said, “We wrote to SEBI seeking waiver for open offer, we are yet to hear from them. Based on response from Sebi, DIPAM, Ministry of Petroleum, and all government bodies will take a decision on what to do. It a little early for a firm answer to PLL and IGL issue. All these questions start from the open offer issue, and current regulations warrant an open offer should there be an acquisition of BPCL by anyone.”

This is a position that BPCL has maintained since August 2021. As per the legal position evaluated by DIPAM, Bharat Petroleum’s acquirer will have to make open offers to the minority shareholders of Petronet LNG and IGL for the acquisition of 26 per cent shares. This could cost the new owner of BPCL another Rs 19,000 crore in open offers for firms where it will have no operational control.

To avoid this additional expense, an exemption from Sebi has been sought.