INDIA has just initiated the country’s biggest ever privatisation drive.
The government on Saturday (7) invited bids for sale of its entire 52.98 per cent stake in the country’s second biggest oil refiner Bharat Petroleum Corporation Limited (BPCL).
Expressions of interest for the strategic sale of BPCL have been invited by May 2, as per the bid document by the Department of Investment and Public Asset Management (DIPAM).
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.
The BPCL has a market capitalisation of about Rs 873.88 billion and the government stake at current prices is worth about Rs 460 billion. The successful bidder will also have to make an open offer to other shareholders for acquiring another 26 per cent 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 tonnes per annum, which is 15 per cent of India’s total refining capacity of 249.4 million tonnes.
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 2020 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.
The offer document, however, said that PSUs “are not eligible to participate”,
“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% of BPCL’s equity share capital along with transfer of management control to a strategic buyer (except BPCL’s equity shareholding of 61.65% in Numaligarh Refinery Limited-NRL),” 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.
Any private company having a networth 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 networth of $1 billion.
Changes in consortium are allowed within 45 days but the lead member cannot be changed, it added.