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Privatization of  BPCL may not be over by FY21-end

File photo of a BPCL refinery in Mumbai. The sale of the government’s 52.98% stake in the company is expected to fetch around  ₹45,000 crore.  (Reuters)Premium
File photo of a BPCL refinery in Mumbai. The sale of the government’s 52.98% stake in the company is expected to fetch around 45,000 crore. (Reuters)

  • In the case of BPCL, transaction adviser Deloitte Touche Tohmatsu India has completed the technical evaluation of the three bids received for the sale of the government’s 52.98% stake, which is expected to fetch around 45,000 crore

The government’s plan to privatize Bharat Petroleum Corp. Ltd (BPCL) is unlikely to be completed by the end of the fiscal year because of the time required to get regulatory clearances for the transaction.

“It has to go to the Competition Commission of India, which will take some time. Since it is a listed company, the winner has to make an open offer, which will also take time. Regulatory requirements may delay the process even after receiving the financial bids. Everything is a well laid-out process, so nothing can be rushed through," a finance ministry official said on condition of anonymity.

With little more than three months left for this fiscal year to end, it may be a tall task for the government to complete the stake sale that is crucial for it to meet the massive disinvestment target of 2.1 trillion set for the year to 31 March.

The finance ministry missed the disinvestment target of 65,000 crore for the year ended 31 March by 14,701 crore, and it is likely to miss the target again due to the pandemic-induced economic downturn. So far this year, the government has garnered 12,225 crore through minority stake sales and an initial public offering of Mazagon Dock Shipbuilders Ltd.

In the case of BPCL, transaction adviser Deloitte Touche Tohmatsu India has completed the technical evaluation of the three bids received for the sale of the government’s 52.98% stake, which is expected to fetch around 45,000 crore.

The transaction adviser has communicated to the bidders whether they have qualified for the second stage of the sale process. In the second stage, a business transfer agreement will be signed with the qualified bidders and they will be allowed to visit BPCL sites, and inspect its books after which they can make the financial bids.

After four extensions in the wake of the pandemic, the deadline for submitting expressions of interest (EoIs) for BPCL ended on 16 November. Only private companies with a net worth of more than $10 billion were eligible. Oil minister Dharmendra Pradhan earlier this month said the privatization of state-owned BPCL received three preliminary bids.

Vedanta Group and two US funds had reportedly submitted their EoIs. A controlling stake in BPCL will give the acquirer access to 25.77% share in India’s fuel retailing market, along with 15.3% 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.

BPCL on 17 December told the stock exchanges of an in-principle approval for the merger of unit Bharat Gas Resources Ltd with itself and the acquisition of 36.62% of shares that it didn’t own in Bharat Oman Refineries Ltd from Oman Oil Co.

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