Govt Calls Off Present Expression of Interest Process To Sell 53% Stake

The government has called off the current expression of interest (EoI) process for BPCL’s privatisation, which was dubbed as India’s biggest ever, as the majority of bidders have expressed their “inability to continue in the current process of disinvestment of BPCL”, according to a notification by the DIPAM. The government had planned to sell its entire 52.98 per cent stake in Bharat Petroleum Corporation Ltd (BPCL) through the strategic disinvestment.

“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, the majority of QIPs have expressed their inability to continue in the current process of disinvestment of BPCL,” the Department of Investment and Public Asset Management (DIPAM) said in the notification released on Thursday.

DIPAM also said that immediately after the invitation for EoI, the EoI submission date had to be extended multiple times due to COVID-19 pandemic, to address the constraints faced by the potential bidders. “In response to the invitation, multiple EoIs were received from interested parties. Qualified interested parties (QIPs) had initiated due diligence on the company.”

“In view of this, based on decisions of the Alternative Mechanism (Empowered Group of Ministers), the Government of India has decided to call off the present EoI process for strategic disinvestment of BPCL and the EoIs received from QIPs shall stand cancelled. Decision on the re-initiation of the strategic disinvestment process of BPCL will be taken in due course based on the review of the situation,” the notification said.

According to a PTI report quoting an official, “We need to go back to the drawing board on BPCL. There are issues in terms of consortium formation, geopolitical situation and energy transition aspects.” The official also said the transition towards green and renewable fuel has made privatisation difficult in existing terms.

Last month, Vedanta Resources Chairman Anil Agarwal had also said the government had decided not to go ahead with Bharat Petroleum Corporation Ltd’s (BPCL) privatisation plan and has told its suitors that it will revise the plan and come to market. Vedanta Group, Apollo Global Management, and private equity major I Squared Capital-backed Think Gas were the buyers to show interest in the company.

The government invited expression of interest from bidders in March 2020 from selling BPCL and by November 2020 at least three bids had come in.

The central government has a disinvestment target of Rs 65,000 crore for the current financial year 2022-23, according to Union Budget documents. For the financial year 2021-22, it had set a disinvestment target of Rs 1.75 lakh crore in the last year’s budget. Out of this only Rs 78,000 crore could be achieved, a reduction of 55.4 per cent.

In the previous year’s Budget Speech 2021, Finance Minister Nirmala Sitharaman had said, “We have kept four areas that are strategic where bare minimum CPSEs [central public sector enterprises] will be maintained and rest privatised.”

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