The government said on Monday that several local and foreign investors have expressed interest in buying its 52.98% stake in fuel retailer Bharat Petroleum Corp. Ltd (BPCL).
Reliance Industries Ltd and Saudi Arabian state oil group Aramco, which were considered the front-runners, were, however, not among those that had submitted interests.
India had extended the deadline for preliminary expression of interest (EoI) four times this year and closed this on Monday.
“For strategic disinvestment of BPCL, multiple expressions of interest have been received by the transaction adviser,” Tuhin Kanta Pandey, secretary, department of investment and public asset management, tweeted on Monday without giving details of the bidders.
The transaction will move to the second stage after scrutiny by the transaction adviser, he said.
“Three-four expressions of interest (EoIs) have been received, which are being scrutinized. These entities will be then asked to submit final bids,” said an official aware of the development.
The privatization of BPCL is essential for meeting the record target of ₹2.1 trillion of disinvestment proceeds that Union finance minister Nirmala Sitharaman set in the budget for 2020-21.
The qualifying bidders in the first EoI phase will be asked to make a financial bid in the second round.
The qualifying bidder will get a controlling stake in BPCL and also access to the 25.77% market share in India’s fuel retailing segment along with 15.3% of India’s total refining capacity.
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.
Till last October, Saudi Aramco, Rosneft, Kuwait Petroleum, ExxonMobil, Shell, Total SA, and Abu Dhabi National Oil Co. were said to have held conversations with the government on asset sales.
However, the coronavirus outbreak and its impact on crude oil prices and fuel demand has hit the profitability of companies, forcing them to slash capital expenditure.
Aramco on 3 November reported a 44.6% drop in third-quarter net profit, dented by lower crude oil prices as covid-19 hit demand.
“BPCL is a promising asset but covid-19 has completely changed the situation. If marquee investors were interested in bidding for BPCL till March 2020, the numbers have dwindled completely,” said an investment banker. It remains to be seen how many of these EoIs convert to bids, the banker said.
