Home / Companies / News /  Govt invites bids for BPCL's privatisation, bars state entities from the process

NEW DELHI: The Indian government on Saturday invited initial bids for sale of its entire 52.98% cent stake in Bharat Petroleum Corp Ltd (BPCL).

The last date for submission of expressions of interest is 2 May and interested parties must have a minimum net worth of $10 billion, according to the bid document issued by the Department of Investment and Public Asset Management.

"CPSEs and central government owned cooperative societies--where the government ownership is 51% or more--are not eligible to participate in the proposed transaction," the bid document said.

The Centre will set the reserve price for the stake sale after receiving bids and the selected bidder will have to make an open offer to acquire at least another 26% stake from minority shareholders, and put the money in escrow for the entire offer, it added.

Deloitte Touche Tohmatsu India LLP has been appointed as the transaction advisor for advising on the proposed stake sale.

The Union Cabinet, in November, had approved the government’s proposal to divest its entire shareholding of 52.98% in BPCL, along with the transfer of management control to a strategic buyer after taking out the Numaligarh Refinery Ltd in Assam from the company’s portfolio. The refinery will be hived off before BPCL’s privatisation and will be taken over by another state-owned company, finance minister Nirmala Sitharaman had then said.

BPCL was nationalized in 1976 by an Act of Parliament after being set up in the 1920s as Burmah Shell, an alliance between Royal Dutch Shell and Burmah Oil Co and Asiatic Petroleum (India).

As of FY19, BPCL was the second-largest oil marketing company in India with a market share of 21% and the third-largest refiner. The company operates four refineries in India - Mumbai Refinery, Kochi Refinery, BORL-Bina Refinery (Bharat Oman Refineries Limited, a joint venture between Bharat Petroleum and Oman Oil Company), and the Numaligarh Refinery – with a combined crude oil refining capacity of 38.3 MMTPA .

The state-owned refiner’s net profit for the quarter ending December jumped nearly three times to 2,051.43 crore from 698.62 crore in the year-ago period. Revenue from operation fell to 85,926.70 crore from 89,324.86 crore a year ago due to slide in global oil prices.

According to the sale document, when bidding in a consortium the maximum number of members allowed, including the lead member, is four. "In a consortium, each consortium member must have a minimum net worth of $1 billion...The combined/cumulative net worth of the consortium should meet the minimum net worth criteria of $10 billion."

Finance minister Nirmala Sitharaman, in her Budget speech on 1 February, had announced a cut in the disinvestment aim for this fiscal to 650 billion rupees from 1.05 trillion rupees. The target for 2020-21 financial year has been pegged at 2.10 trillion rupees.

During the current fiscal so far, the government has garnered 348.45 billion in disinvestment proceeds.

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