Govt extends BPCL bid deadline to November 16

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The government has for the fourth time extended the deadline for bidding for privatisation of India's second-biggest oil refiner Bharat Petroleum Corp Ltd (BPCL) by one and a half months to November 16. While the Cabinet, in November last year, had approved the sale of the government's entire 52.98 per cent stake in BPCL, offers seeking expression of interest (EoI) or bids showing interest in buying its stake were invited only on March 7.

Initially, the EoI submission deadline was May 2, but it was first was extended up to June 13, then to July 31 and later to September 30.

"In view of further requests received from the interested bidders (IBs) and the prevailing situation arising out of COVID-19 pandemic, the last date for submission of EoIs is further extended to November 16, 2020 (by 5.00 pm)," the Department of Investment and Public Asset Management (DIPAM) said in a notice.

The government is keen to close the sale before March 31, 2021, to help meet a record Rs 2.1 lakh crore target which Finance Minister Nirmala Sitharaman has set from disinvestment proceeds in the Budget for 2020-21.

But with this extension, the sale being completed by March 2021 looks doubtful as after EoIs come in, the government will open a data center for interested bidders to conduct due diligence, only after which financial bids will be called, industry sources said.

The financial bids will have to be evaluated and approved by the Cabinet and the transaction will close once the payment is made.

At Wednesday's trading price of Rs 360.55 on the BSE, BPCL has a market capitalisation of about Rs 78,300 crore. At this price, the government's stake is worth over Rs 41,436 crore.

The acquirer will also have to make an open offer to minority shareholders for buying up to 26 per cent stake at the same price.

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), the notice inviting offer said.

Numaligarh Refinery stake will be sold to a state-owned oil and gas firm.

State explorer Oil India Ltd (OIL) and Engineers India Ltd (EIL) are likely to buy Numaligarh Refinery.

The bidding will be a two-stage affair, with qualified bidders in the first EoI phase being asked to make a financial bid in the second round.

Public sector undertakings (PSUs) "are not eligible to participate" in the privatisation, the offer document said.

Any private company having a net worth of USD 10 billion is eligible for bidding and a consortium of not more than four firms will be allowed to bid, it said.

According to the bidding criteria, the lead member of the consortium must hold a 40 per cent stake and others must have a minimum net worth of USD 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 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.

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 16,814 petrol pumps and 6,143 LPG (liquefied petroleum gas) distributor agencies in the country. Besides, it has 51 LPG bottling plants.

The company distributes 21 per cent of petroleum products consumed in the country by volume as of March this year and has 61 out of the 256 aviation fuel stations in the country.

The government has appointed Deloitte Touche Tohmatsu India LLP as its transaction advisor for the strategic disinvestment process.