The Central government has for the second time extended the deadline for bidding for privatisation of the Bharat Petroleum Corporation (BPCL) by over a month to 31 July 2020.
While the Union Cabinet had in November 2019 approved the sale of government's entire 52.98 percent stake in BPCL, offers seeking expression of interest (EoI), or bids showing interest in buying its stake, were invited only on 7 March 2020. The EoI submission deadline was 2 May 2020, but on 31 March 2020 it was extended up to 13 June 2020.
The government of India is proposing strategic disinvestment of its entire shareholding in BPCL comprising 114.91 crore equity shares, which constitute 52.98 percent of BPCL's equity share capital along with transfer of management control to a strategic buyer, except BPCL's equity shareholding of 61.65 percent in Numaligarh Refinery. Numaligarh Refinery stake will be sold to a state-owned oil and gas firm.
The bidding will be a done in two stages, with qualified bidders in the first EoI phase being asked to make a financial bid in the second round. The public sector undertakings (PSUs) are not eligible to participate in the privatisation.
Any private company having a net worth of USD 10 billion is eligible for bidding and consortium of not more than four firms will be allowed to bid. According to the bidding criteria, the lead member of the consortium must hold 40 percent stake and others must have a minimum net worth of USD one billion.
Changes in the consortium are allowed within 45 days, but the lead member cannot be changed. BPCL will give buyers ready access to 14 percent of India's oil refining capacity and about one-fourth of the fuel market share in the world's fastest-growing energy market.
BPCL has a market capitalisation of about Rs 68,223 crore and the government stake at current prices is worth about Rs 36,159 crore. The successful bidder will also have to make an open offer to other shareholders for acquiring another 26 percent at the same price.
BPCL operates four refineries in Mumbai (Maharashtra), Kochi (Kerala), Bina (Madhya Pradesh) and Numaligarh (Assam) with a combined capacity of 38.3 million tonne per annum, which is 15 percent of India's total refining capacity of 249.4 million tonne.
While the Numaligarh refinery will be carved out of BPCL and sold to a PSU, the new buyer of the company will get 35.3 million tonne of refining capacity. BPCL also owns 15,177 petrol pumps and 6,011 liquefied petroleum gas(LPG) distributor agencies in the country. Besides, it has 51 LPG bottling plants.
The company distributes 21 percent of petroleum products consumed in the country by volume as of March this year and has more than a fifth of the 250 aviation fuel stations in the country. The government has appointed Deloitte Touche Tohmatsu India as its transaction advisor for the strategic disinvestment process.
