BPCL privatisation: BPCL winds up data room after govt puts off privatisation

State-owned Bharat Petroleum Corporation Ltd (BPCL) has discontinued all activities associated with the disinvestment of the company after the government dropped plans to privatise the firm for now. In a stock exchange filing, the company said the government has through a letter dated June 3, 2022, called off the present tender to sell its entire 53 per cent stake in the company.

“Accordingly, all the activities in connection with the disinvestment including the data room are being discontinued,” the firm said.

The move by the central government to call off the expression of interest (EoI) followed two out of the three bidders walking out.

BPCL had in April last year opened a virtual data room, mostly containing financial information on the company, for the qualified bidders signing Confidentiality Undertaking (CU).

A ‘Clean Data Room‘ containing commercially sensitive information on the firm subject to their signing an additional confidentiality agreement was also opened for bidders.

Bidders which included mining-to-oil conglomerate

and private equity firms Apollo Global and I Squared Capital’s arm Think Gas were also allowed physical inspection of assets such as refineries and depots as part of the due diligence process.

The government was to seek financial bids once bidders completed due diligence and the terms and conditions of the share purchase agreement (SPA) were negotiated.

But that stage was never reached.

BPCL had in an earnings call with investors on February 2, 2022, stated that no bidder had visited the firm’s premises in the previous quarter (October-December 2021).

The data room access for due diligence was available for a period of around 8 weeks.

Calling off the bid process, the Department of Investment and Public Asset Management (DIPAM) had stated that multiple pandemic waves and geopolitical situations impacted sectors around the world, especially the oil and gas industry.

“Owing to prevailing conditions in the global energy markets, the majority of QIPs (qualified interested parties) have expressed their inability to continue in the current process of disinvestment of BPCL,” it had said last month.

A group of ministers on disinvestment agreed to half the current EoI process and initial bids received from QIPs be cancelled, it had said on May 26.

The sale of government’s 52.98 per cent stake in BPCL was part of the Rs 1.75 lakh crore disinvestment target for 2021-22 (April 2021 to March 2022). But the Covid-19 outbreak slowed down the sale process and the sale got pushed into 2022-23 before it was put off.

A special purpose vehicle floated by the BSE-listed Vedanta and its London-based parent Vedanta Resources Plc submitted an expression of interest (EoI) for buying the government stake in BPCL before the close of the deadline on November 16, 2020.

It continued to be in the fray but the two private equity firms withdrew.

BPCL would have given the buyer ownership of around 15.33 per cent of India’s oil refining capacity and 22 per cent of the fuel marketing share.

The buyer would have got a 12 million tonne a year refinery at Mumbai, 15.5 million tonne Kochi refinery and 7.8 million tonne Bina unit.

BPCL also owns 20,088 petrol pumps, 6,220 LPG distributor agencies and 60 out of 270 aviation fuel stations in the country.