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Several Bids Received For BPCL Privatisation, Says Divestment Secretary

The deadline to submit EoIs for BPCL was Nov. 16 after having been extended five times.

The BPCL is displayed at a fuel station in Mumbai. (Photographer: Vivek Prakash/Bloomberg)
The BPCL is displayed at a fuel station in Mumbai. (Photographer: Vivek Prakash/Bloomberg)

The process to privatise Bharat Petroleum Corporation Ltd. has moved forward with several domestic and international investors showing interest to acquire the oil refiner, according to the government.

Multiple Expressions of Interest (EoIs) for the divestment of BPCL were received by the transaction adviser, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey wrote on Twitter. Bids have been received from global as well as local players for the proposed stake sale, Pandey told Bloomberg in an interview.

The deadline for submitting the EoIs was today.

"The transaction will move to the second stage after scrutiny by the transaction adviser," the secretary wrote on twitter.

As per the process, the EoIs submitted will be evaluated on the criteria provided in the Preliminary Information Memorandum. For submitting the EoI, as well as qualifying for the second stage of the transaction, the interested party should have a minimum net worth of $10 billion as per its latest audited financial statement, according to the Preliminary Information Memorandum.

The first deadline to submit the EoIs was May 2, but the bidding process was extended several times - to June 13, July 31, September 30 and finally November 16. The DIPAM Secretary had on October 19 said that there would be no extension of the Nov. 16 deadline.

Four industry officials said 3-4 bids have been put in, news agency PTI reported.

Reliance Industries Ltd., which was considered a potential bidder as BPCL, would have added 22% fuel market share to its fledgling retail business -- making it the nation's number one oil refiner, did not put in an expression of interest at the close of the deadline on Monday, according to PTI.

Nor did Saudi Arabian Oil Company (Saudi Aramco), which had been keen to enter the world's fastest-growing fuel market. U.K.'s BP Plc and Total of France - that have had plans to foray into the Indian fuel market - had previously ruled themselves out of the BPCL race as they did not want to add oil refining assets at a time when the world was moving away from liquid fuels.

A clutch of private equity funds and/or pension funds are said to have put in EoIs, according to PTI.

Russian energy giant Rosneft-led Nayara Energy, which operates a 20 million tonne oil refinery at Vadinar in Gujarat and also has 5,822 petrol pumps, was considered a potential bidder for BPCL but reports last month had indicated it was no longer keen.

Abu Dhabi National Oil Co (ADNOC), which has ambitions for Indian market, too was considered a potential bidder but it wasn't immediately known if it had put in an EoI.

Mining billionaire Anil Agarwal was considered another potential bidder given his interest in the oil and gas business with the $8.67 billion acquisition of Cairn India.

As yet, the government has shared no official information on the bidders, nor have any bidders announced their participation.

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Maharatna Privatsation

BPCL is India's second-largest oil marketing company with a standalone domestic sales volume of over 43.10 million tonnes per annum and a market share of 22% during FY20. It is India's 6th largest company by turnover.

Its privatisation is essential for meeting the record Rs 2.1 lakh crore target the finance minister has set from disinvestment proceeds in the union budget for 2020-21.

The government holds 52.98% stake in the fuel retailer, according to the latest shareholding data on the stock exchanges.

The approval to sell the entire government stake was granted by the central government in November last year, but offers seeking expression of interest or bids showing interest in buying its stake were invited only starting March 7.

The purchase of a controlling stake in BPCL will give the buyer ownership to 15.33% of India's oil refining capacity and 22% of the fuel marketing share.

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 15.3% of India's total refining capacity of 249.8 mtpa.

While the Numaligarh refinery will be carved out of BPCL and sold to a public sector unit, the new buyer of the company will get 35.3 million tonne of refining capacity - 12 million tonne Mumbai unit, 15.5 million tonne Kochi refinery and 7.8 million tonne Bina unit. It also owns 17,138 petrol pumps, 6,151 LPG distributor agencies and 61 of 256 aviation fuel stations in the country.

The refiner also has upstream presence with 26 assets in 9 countries such as 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).

Shares of BPCL fell as much as 5% to Rs 392.1 in the early minutes of trading. The stock was the worst performing stock on the NSE Nifty 50 index.

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