Bid for BPCL: Last date for submission extended to September 30

The Government has decided to extend the last date of submission of bids for BPCL’s strategic disinvestment by two months.

“In view of the further requests received from the Interested Bidders (IBs) and the prevailing situation arising out of Covid-19, last date and time (“EOI Due Date”) for submission of EoIs (Expression of Interest) is extended up-to 30th September, 2020,” Department of Investment and Public Asset Management (DIPAM) posted on its website. Earlier the last date was July 31.

The government intends to sell its entire stake of 52.98 per cent in this oil and marketing company, which will not include BPCL’s 61.65 per cent stake in Numaligarh Refinery Limited. Accordingly, Preliminary Information Memorandum (PIM) for inviting EOI was issued on March 7, which was later extended to June 30 and July 31 respectively. It is believed that all oil majors, be it Saudi Armaco, Abu Dhabi National Oil Co (Adnoc), Rosneft of Russia, Exxon Mobil, or even Reliance Industries are interested in buying BPCL. However, there is no official word from any of this county.

According to PIM, BPCL is second largest oil marketing company in India with a market share of 21 per cent in FY 2018-19 and third largest with refining capacity. It is a publicly listed company with its share price closed at ₹453.70 on Wednesday. Based on this price, the government could get over ₹52,000 crore which is one-fourth total disinvestment (including divestment of its stake in Public Sector Banks and Financial Institutions) target of ₹2.10 lakh crore and little less than half of disinvestment target (₹1.20 lakh crore) minus estimated proceed from sell-off in IDBI and LIC.

The government has set minimum net-worth criteria for interested bidder at $10 billion ( ₹75,000 crore approximately), Interested party could be any private limited company, public limited company, Limited Liability Partnership (LLP), SEBI registered Alternative Investment Fund (AIF) or a company/a fund incorporated outside India (eligible to invest in India). Bidders can be sole or as a consortium. Management/employees of BPCL can also participate in the process, but such employees will have to incorporate a company which only can submit the EOI, either itself as a Sole IP or as a member of a consortium. Also, the company will need to fulfil the net-worth criteria.

Sell-off of BPCL is critical for the Government as it is looking for all possible revenue sources. Tax revenue is down, but expenditure is rising, and the fiscal deficit has already crossed over half of the budget target in just two months of the current fiscal. Due to pandemic, the Government could not complete any sale transaction during the April-July period.

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