Government invites bids for BPCL, it seeks to sell entire 52.98% stake in the company

In the country's biggest ever privatisation drive, the government today, on March 7, 2020, invited bids for the sale of its entire 52.98 per cent stake in Bharat Petroleum Corporation (BPCL).

The Department of Investment and Public Asset Management (DIPAM) in the bid document says, "Expressions of Interest (EoI) for the strategic sale of BPCL were invited by May 2. The last date for investor queries is April 4."

It read, "The Government of India is proposing strategic disinvestment of its entire shareholding in BPCL comprising 114.91 crore equity shares, which constitutes 52.98 per cent of BPCL's equity share capital, along with transfer of management control, to a strategic buyer, except BPCL's equity shareholding of 61.65 per cent in Numaligarh Refinery." NRL stake will be sold to a state-owned oil and gas firm.

The bidding will be a two-stage affair, with qualified bidders in the first

expression of interest (EoI) phase being asked to make a financial bid in the second round.

PSUs "are not eligible to participate" in the privatisation, the offer document said. To be eligible for participation, bidders must have a minimum net worth of $10 billion as on date. Besides this, a consortium bidder can constitute a maximum of four members, where the lead member must 40 per cent in proportion, while other members must have a minimum net worth of $1 billion.

Changes in the consortium are allowed within 45 days but the lead member cannot be changed, it added.

The government has appointed Deloitte Touche Tohmatsu India LLP as its transaction advisor to advise on and manage the strategic disinvestment process.

What the buyers will get?

BPCL will give buyers ready access to 14 per cent 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 87,388 crore and the government stake at current prices is worth about Rs 46,000 crore. The successful bidder will also have to make an open offer to other shareholders for acquiring another 26 per cent at the same price.

Need for the privatisation of BPCL

BPCL's privatisation is required to meet the record Rs 2.1 lakh crore disinvestment targets that Finance Minister Nirmala Sitharaman has set from disinvestment proceeds in the Budget for 2020-21.

BPCL and its refineries

Bharat Petroleum Corporation Limited is an oil and Gas Company headquartered in Mumbai, Maharashtra. It operates four refineries in Mumbai (Maharashtra), Kochi (Kerala), Bina (Madhya Pradesh) and Numaligarh (Assam) with a combined capacity of 38.3 million tonnes per annum, which is 15 per cent of India's total refining capacity of 249.4 million tonnes. It also owns 6,011 LPG distributor agencies and 15,177 petrol pumps across India. It also has 51 LPG (liquefied petroleum gas) bottling plants.

The company, at present, distributes 21 per cent of petroleum products consumed in the country by volume as of March 2020. It also has more than a fifth of the 250 aviation fuel stations in the country.

Numaligarh Refinery will be carved out of BPCL during the process of divestment and sold to a PSU. The new buyer of the company will get 35.3 million tonnes of refining capacity.

(With inputs from PTI)