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NEW DELHI : The government is weighing its options on the strategic disinvestment of Bharat Petroleum Corp. Ltd, including whether it needs to return to the drawing board and restart the bidding process or revise certain conditions in the existing process.

Rising oil prices and the increasing tilt towards green energy have thrown up fresh issues for bidders, posing challenges for the disinvestment process, an official aware of the development said.

“There are several issues... bidders also appear to be facing issues in terms of securing investors; the oil prices are not helping the situation either... we will have to take a call on the next steps," the official said on condition of anonymity.

The government had received multiple bids for BPCL in November 2020 from miner Vedanta Resources, and private equity firms Apollo Global and I Squared Capital’s arm Think Gas. However, Mint has learnt that Think Gas has dropped out, leaving only two companies in the bidding process.

Vedanta Resources is planning to set up a $10 billion fund to bid for the government’s stake in BPCL and other assets, chairman Anil Agarwal said in January.

Apollo Global declined to comment. Emails sent to Vedanta and I Squared Capital did not elicit a response as of press time.

Bidders need to have a net worth of $10 billion, and public sector units with government ownership of 51% and more have been excluded as per the initial terms and conditions set by the government when it began the BPCL disinvestment process in early 2020.

The government is yet to invite financial bids, even though it had initially planned to close the deal by March 2021. The covid pandemic also led to delays in finding suitors.

A second official said that the value that the government will get from the transaction is a key factor since BPCL’s share price has fallen over the past year.

In April 2021, the stock was trading in a range of 418 to 422, but in April 2022, it fell to the 374-390 range. On Friday, the shares fell 1.06% to 393.5 on BSE.

The government, which holds a 52.98% stake in BPCL, plans to sell its entire holding and transfer management control as part of the strategic disinvestment process, making the deal a lucrative one as a private company will be able to reap benefits from the profitable asset.

However, at the current share price, the market cap of the country’s second-largest oil refining and marketing company comes to 85,360 crore, lower than over 90,000 crore back in November 2020 when it had received the bids.

The government would get about 45,000 crore from the transaction at current valuation. Mint had reported in January 2021 that the transaction could be valued at 90,000 crore.

Proceeds from the sale will help the government achieve its 65,000 crore disinvestment target set for FY23.

Queries sent to the finance ministry and BPCL remained unanswered till press time.

The qualifying bidder will not only have a controlling stake in BPCL but will also get access to a 25.77% market share in India’s fuel retailing segment, 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.

As part of the privatization process, BPCL last year sold its 61.65% stake in Assam-based Numaligarh Refinery Ltd (NRL) for 9,875 crore to a consortium of Oil India Ltd (OIL) and Engineers India Ltd (EIL) (49%) and the remaining 13.65% to the Assam government in March.

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