BPCL halts all divestment-related activities after government postpones privatization – The New Indian Express
NEW DELHI: State-owned Bharat Petroleum Corporation Ltd (BPCL) has ceased all activities related to the company’s divestment after the government dropped its plans to privatize the company for the time being.
In a filing, the company said the government had, by letter dated June 3, 2022, canceled the current tender to sell its entire 53% stake in the company. “As a result, all divestment-related activities, including the data room, are halted,” the company said.
The central government’s decision to cancel the Expression of Interest (EoI) followed the departure of two of the three bidders. BPCL had opened a virtual data room in April last year, containing mainly financial information about the company, for qualified bidders signing the confidentiality undertaking (CU).
A “Clean Data Room” containing commercially sensitive information about the company subject to the signing of an additional confidentiality agreement was also opened to bidders.
The bidders, which included mining-oil conglomerate Vedanta and private equity firms Apollo Global and Think Gas, the arm of I Squared Capital, were also allowed to physically inspect assets such as refineries and depots in the as part of the due diligence process.
The government was to seek financial offers once the bidders had completed their due diligence and the terms and conditions of the share purchase agreement (SPA) had been negotiated. But this stage was never reached. BPCL had, in a conference call with investors on February 2, 2022, stated that no bidders had visited the company’s premises during the previous quarter (October-December 2021).
Access to the data room for due diligence was available for a period of approximately 8 weeks.
Canceling the bidding process, the Department of Investment and Public Assets Management (DIPAM) had said that multiple pandemic waves and geopolitical situations were impacting sectors around the world, particularly the oil and gas industry.
“Due to the prevailing conditions in the global energy markets, the majority of QIPs (qualified interested parties) have expressed their inability to proceed with the current process of divestment from BPCL,” he said last month.
A group of ministers on divestment has accepted half of the current EoI process and the cancellation of initial offers received from QIPs, he said on May 26. The sale of the government’s 52.98% stake in BPCL was part of the divestment target of Rs 1.75 lakh crore for 2021-22 (April 2021 to March 2022).
But the COVID-19 outbreak slowed the sale process and the sale was pushed back to 2022-23 before being rescheduled.
A special purpose vehicle launched by BSE-listed Vedanta and its London-based parent company, Vedanta Resources Plc, have submitted an expression of interest (EoI) to buy the government’s stake in BPCL ahead of the deadline closes November 16, 2020.
He continued to be in the fray but both private equity firms pulled out. BPCL would have given the buyer ownership of about 15.33% of India’s oil refining capacity and 22% of the fuel marketing share.
The buyer would have obtained a 12 million tonnes per annum refinery in Mumbai, a 15.5 million tonnes refinery in Kochi and a 7.8 million tonnes unit in Bina. BPCL also owns 20,088 petrol pumps, 6,220 LPG distribution agencies and 60 of the 270 aviation service stations in the country.