Centre’s Bid to Sell 53% Stake to Privatise BPCL Fails as Most Bidders Back Out

New Delhi: The government on Thursday withdrew its offer to sell its entire 53% stake in BPCL, saying that majority of bidders have expressed their inability to participate in the current privatisation process due to prevailing conditions in the global energy market.

The government had planned to sell its entire 52.98% stake in Bharat Petroleum Corporation Ltd (BPCL) and invited Expressions of Interest (EoIs) from bidders in March 2020. At least three bids came in by November 2020.

However, the privatisation was stalled after two bidders walked out over issues such as lack of clarity in fuel pricing, with just one bidder left in the fray.

The Department of Investment and Public Asset Management (DIPAM) said in response to the invitation, multiple EoIs were received from interested parties. Qualified Interested Parties (QIPs) had initiated due diligence of the company.

However, the multiple COVID-19 waves and geopolitical conditions affected industries globally, particularly the 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," it said.

In view of this, the group of ministers on disinvestment has decided to call off the present EoI process for the strategic disinvestment of BPCL and the EoIs received from QIPs shall stand cancelled, DIPAM said.

"Decision on the re-initiation of the strategic disinvestment process of BPCL will be taken in due course based on review of situation," it added.

The privatisation of India's second-largest state oil refining and fuel marketing company had not attracted much interest initially due to the volatile global oil price scenario and later because of lack of clarity in domestic fuel pricing.

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

Mining mogul Anil Agarwal's Vedanta group and US venture funds Apollo Global Management Inc and I Squared Capital Advisors had expressed interest in buying the government's 53% stake in BPCL.

But the two funds withdrew after failing to rope in global investors amid waning interest in fossil fuels.

Public sector fuel retailers, which control 90% of the petrol and diesel market, sell these fuels at prices below the cost.

As the government takes a fresh look at BPCL privatisation, including revising the terms of sale, it may offer a 26% stake along with management control in the company, considering the geopolitical situation and energy transition, a source said.

This will limit the amount of money a bidder has to put upfront to buy the company.

BPCL is India's second-largest oil marketing company after Indian Oil, and with refineries in Mumbai, Kochi and Madhya Pradesh, it has the third-largest refining capacity after Reliance and Indian Oil.