Global players may form consortium to bid for BPCL

Some global oil majors are likely to be teaming up with investment funds that are keen on buying out the public sector oil refiner and retailer- BPCL. The procedure allows interested parties to form a consortium with any one of the bidders which had submitted an expression of interest (EoI).

Consortium route

Russia’s Rosneft and some top oil producers from the Middle East were said to be interested in BPCL. But they hadn’t submitted bids, according to a report in the Mint. The news report quoting industry sources said it was possible that one of the global oil majors or a Middle East oil producer may be teaming up with the investment funds already in the race.

The successful bidder would get access to over 14% of India’s oil refining capacity and 23% fuel market share.

The government is selling its entire 53.29 % stake in the BPCL to a strategic investor to mobilise over Rs 52,000 crore as a disinvestment receipt. Though the disinvestment process started in 2019, it has been postponed on numerous occasions due to pandemic-related disruptions. Reliance Industries Ltd and Adani group are “extremely unlikely” to join the race, as per the media report.

Lakshmi N Mittal, who operates an oil refinery in Punjab in JV with Hindustan Petroleum Ltd, is also not interested in BPCL, going by the news reports. At the current market price, BPCL is valued at Rs 80,000 crore.

Security clearance

Even as the divestment process is making progress, transaction advisors and asset valuers are yet to submit an inception report. Besides, bidders need complete due diligence. The sale purchase agreement also needs to be finalised.

“Security clearance” is also required “since consortiums are being formed”, the report said.

Another report quoting sources had said that the government may come up with a clarification that the BPCL under new private-sector owners would be allowed to bring in 100% foreign direct investment (FDI) without conditions.