BPCL Privatisation: Finance Ministry in Wait-and-Watch Mode After Buyers Withdraw

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The privatisation of Bharat Petroleum Corporation Limited (BPCL) will have to wait for some more time as the Union finance ministry has resorted to a “wait and watch mode”, officials have told CNBC-TV18. This comes after the consortia that submitted expressions of interest (EoI) did not express further enthusiasm regarding the privatisation.

According to the report by CNBC-TV18, the reasons for developing this cold feet can be several. This includes “changing dynamics of the fossil fuel market, the deep pockets needed to buy a blue chip like BPCL and changes in the composition of various consortia that had initially shown interest”, the officials said.

The report, quoting the officials, said that as many as five out of the six EoIs received have been withdrawn. A lone EoI from Vedanta remains now.

The bid for BPCL is at EOI stage and in case the transaction culminates, the company may undertake management of the acquired business, through appropriate profit-sharing arrangement or on management fee model, Vedanta has said in a statement. A specific fund, with a strategic investor will be set up to fund the potential investment, without leveraging Vedanta Ltd’s balance sheet, it noted.

The report has also noted that the Centre at this stage is not going to call for fresh EoIs.

“The government is holding on to the current process and the transaction advisor will attempt to persuade potential buyers to return to the table,” the officials were quoted as saying by CNBC-TV18.

BPCL’s privatisation will remain at the due diligence stage till this issue is settled. It is also to be noted that potential buyers yet to undertake physical visits at the state-backed fuel refiner and access the virtual data room.

BPCL had in April 2021 opened a virtual data room, mostly containing financial information on the company, and qualified bidders signing confidentiality undertaking (CU) had been given access.

The government is selling its entire 52.98 per cent stake but financial bids are yet to be called.

In an interaction with PTI, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said the next year’s target would be met by a mix of minority stake sale in CPSEs, listing of CPSEs and strategic sale.

“We have got multiple financial bids for Pawan Hans, we have to go further on that process. Shipping Corp, BEML and BPCL are in financial bids stage. HLL Lifecare and PDIL are in EoI stage. Besides, next fiscal we will go for listing of ECGC, WAPCOS and National Seeds Corporation and some minority stake sale, but there we might have less bandwidth,” Pandey told PTI.

Asked where BPCL privatisation process stands, he said “We are stuck with the bidders and are trying to fast-track it, so that they are ready for bidding.”

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