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Three bidders in fray for BPCL stake sale: Dharmendra Pradhan

Mining giant Vedanta had on November 18 confirmed putting an expression of interest (EoI) to buy out the government's 52.98% stake in the Bharat Petroleum Corporation Ltd (BPCL)

twitter-logoBusinessToday.In | December 2, 2020 | Updated 18:17 IST
Three bidders in fray for BPCL stake sale: Dharmendra Pradhan
Oil Minister Dharmendra Pradhan said the government is looking to privatise some of the state-owned companies to bring in professionalism and competition

The Centre has received three preliminary bids for the acquisition of controlling stake in Bharat Petroleum Corporation Ltd (BPCL), Oil Minister Dharmendra Pradhan said on Wednesday.

Mining giant Vedanta had on November 18 confirmed putting an expression of interest (EoI) to buy out the government's 52.98 per cent stake in the India's largest fuel retailer. The other two bidders are global funds, one of which is Apollo Global Management.

Talking at a webinar series on 'The Road To Atnmanirbhar Bharat' organised by Swarajya Magazine, Pradhan said, "a lot of interest is there" for BPCL adding that "DIPAM has recently informed market... I think three parties have given EoI for the bidding process."

Also Read: No extension in deadline for BPCL bids, Centre gets 'sufficient response'

The minister, however, did not give out any further details.

Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM) had tweeted on November 16 - the last date for bidding - that transaction advisors (TAs) for the sale had reported receiving "multiple expressions of interest".

"The transaction will move to the second stage after scrutiny by TAs," he had said. Pradhan said the government is looking to privatise some of the state-owned companies to bring in professionalism and competition.

"As I have earlier said, the government is committed to offloading its share from some state-owned companies. That way more professionalism and competition will come. We are committed and keen on that aspect," he said.

A special purpose vehicle (SPV) floated by BSE-listed Vedanta Ltd and its London-based parent Vedanta Resources submitted an EoI before the close of the deadline on November 16.

The government is selling its entire 52.98 per cent stake in BPCL as part of plans to raise a record Rs 2.1 lakh crore from disinvestment proceeds in financial year 2020-21.

But the share price of BPCL has plunged by nearly a fourth since the time the strategic sale was approved in November last year.

Also Read: Tough time to attract global oil giants to bid for BPCL

At Wednesday's trading price of Rs 385 on BSE, the government's 52.98 per cent stake in BPCL is worth just over Rs 44,200 crore. The acquirer would also have to make an open offer to buy another 26 per cent stake from the public, which would cost about Rs 21,600 crore.

Vedanta's interest in BPCL stems from its $8.67 billion acquisition of oil producer Cairn India nearly a decade back. The company produces oil from oilfields in Rajasthan which are used in refineries such as those operated by BPCL to turn them into petrol, diesel and other fuels.

Sources said transaction advisors have begun evaluating the EoIs to ascertain if the bidders meet the qualifying criteria and have the financial muscle to carry out the acquisition. The process may take two-three weeks. Thereafter a request for proposal (RFP) will be issued and financial bids sought.

BPCL 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 15.3 per cent of India's total refining capacity of 249.8 million tonnes.

Also Read: BPCL stake sale: Last day to submit bids; all eyes on RIL

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 tonnes of refining capacity -- 12 million tonnes Mumbai unit, 15.5 million tonnes Kochi refinery and 7.8 million tonnes Bina unit.

BPCL also owns 17,355 petrol pumps, 6,156 LPG distributor agencies and 61 out of 256 aviation fuel stations in the country. It is India's second-largest oil marketing company with a standalone domestic sales volume of over 43.10 million tonnes and a market share of 22 per cent during FY20. It is India's sixth-largest company by turnover.

Its petrol pumps sell more fuel than the industry average -- BPCL pumps sell 124 kilolitres per month compared to the industry average of 116, according to the company's website.

The firm also has an upstream presence with 26 assets in nine countries including Russia, Brazil, Mozambique, the UAE, Indonesia, Australia, East Timor, Israel and India. It is also making a foray into city gas distribution and has licences for 37 geographical areas (GAs).

(With inputs from PTI.)

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