The Government has called off the strategic disinvestment of oil marketing company, Bharat Petroleum (BPCL) citing lack of bidders’ interest. This is third strategic disinvestment which has been called off or put on hold in the current fiscal.

Government owns 52.98 per cent in the company and wanted to sell entire stake along with management control.

In an update, Department of Investment and Public Asset Management (DIPAM) said: “Based on the decisions of the Alternative Mechanism (empowered group of ministers), Government of India has decided to call off the present EoI (expression of interest) process for strategic disinvestment of BPCL, and the EoIs received from QIP (qualified interested arties) shall stand cancelled.” Further, it said that decision on the re-initiation of the process will be taken in due course based on review of situations.

The Government on November 20, 2019, gave in-principle approval for strategic disinvestment of Government’s shareholding in BPCL excluding BPCL’s shareholding in Numaligarh Refinery (NRL). Further, as per the above approval, BPCL’s shareholding in NRL has to be divested to a Central Public Sector. Following which a global invitation was issued on March 07, 2020 for EoI.

Covid, geo-political conditions

DIPAM says multiple EoIs received and they also initiated due diligence of the company. However,” the multiple Covid-19 waves and geo-political conditions affected multiple industries globally, particularly oil and gas industry. Owing to prevailing conditions in the global energy market, most of the QIPs have expressed their inability to continue in the current process of disinvestment of BPCL,” DIPAM explained for reasons to call off. There are unconfirmed reports that just one QIP left in the fray and the government did not want to take any chance, so it preferred to call off.

BPCL has already sold entire Investment in Equity Shares of Numaligarh Refinery have been sold to a consortium of Oil India and Engineers India ; and to Government of Assam during FY 2020-21 at a total consideration of ₹9,875.96 crores. 

Earlier, Government officials had said that the strategic buyer will bring funds/technology/new management etc. for optimum development of business potential of the BPCL. The growth of the BPCL, post-disinvestment, would be able to generate higher economic activity including growth of the ancillary industries and creation of new job opportunities. The resources unlocked by the strategic disinvestment of BPCL would be used to finance the social sector/developmental programmes of the Government benefiting the public, they had claimed.

CE, Hindustan Zinc

Only in this month, strategic disinvestment of helicopter service provider Pawan Hans was put on hold as the government wants to legally examine an order against key consortium member of successful bidder. Prior to that, transaction for Central Electronics (CE) was deferred because of the legal matter.

Now, the government is planning to sell residual stake in Hindustan Zinc for which Cabinet Committee on Economic Affairs (CCEA) gave its in-principle approval on Wednesday. Since, it is ceased to be a Central Public Sector Undertakings, government officials do not see any problem in this transaction.

In the FY23 Budget,  the government has announced that ₹65,000 crore will be realised through disinvestment and out of that, over ₹23,500 crore has been obtained through offer for sale (OFS) through stock exchanges, employee OFS and IPO (initial public offer). 

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