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Govt begins sale of BPCL in biggest ever privatisation drive

Govt begins sale of BPCL in biggest ever privatisation drive

New Delhi: The Indian government on Saturday invited initial bids for the sale of its entire 52.98 per cent stake in Bharat Petroleum Corporation Limited (BPCL) in what may be considered to be the country's biggest ever privatisation drive.

The last date for submission of expressions of interest is May 2 and interested parties must have a minimum net worth of $10 billion, according to the bid document issued by the Department of Investment and Public Asset Management.

"The Government of India is proposing strategic disinvestment of its entire shareholding in BPCL comprising of 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 Limited)," it said.

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.

Any private company having a net worth of $10 billion is eligible for bidding and consortium of no more than four firms will be allowed to bid, it said.

As per the bidding criteria, the lead member of the consortium must hold 40 per cent stake and others 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.

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.

Privatisation of BPCL is essential for meeting the record Rs 2.1 lakh crore target Union Finance minister Nirmala Sitharaman has set from disinvestment proceeds in the Budget for 2020-21.

As of FY19, BPCL was the second-largest oil marketing company in India with a market share of 21 per cent and the third-largest refiner. The company operates four refineries in India — Mumbai Refinery, Kochi Refinery, BORL — Bina Refinery (Bharat Oman Refineries Limited, a joint venture between Bharat Petroleum and Oman Oil Company), and the Numaligarh Refinery — with a combined crude oil refining capacity of 38.3 MMTPA.

The state-owned refiner's net profit for the quarter ending December jumped nearly three times to Rs 2,051.43 crore from Rs 698.62 crore in the year-ago period. Revenue from operation fell to Rs 85,926.70 crore from Rs 89,324.86 crore a year ago due to a slide in global oil prices.

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.

BPCL also owns 15,177 petrol pumps and 6,011 LPG distributor agencies in the country. Besides, it has 51 LPG (liquefied petroleum gas) bottling plants.

The company distributes 21 per cent 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 LLP as its transaction advisor for the strategic disinvestment process.

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