BPCL sale on back burner

New Delhi: The government has put the privatization of Bharat Petroleum Corp Ltd (BPCL) on hold. Several reasons, like rising crude prices and indifferent performance of the BPCL share, are said to be responsible for the halt.

"BPCL privatization is not on track," a senior official in the Department of Investment and Public Asset Management (Dipam) informed Bizz Buzz. "It's not moving. Decision is on the table. We have to take it."

He, however, didn't specify what decision the government is contemplating.

The Dipam official actually confirmed what Vedanta Group Chairman Anil Agarwal had said on April 24. "It (BPCL divestment) will not happen. They've said that they (the government) have withdrawn the offer, they will come back with a new strategy," he had told a news website.

Vedanta Resources and private equity (PE) firms Apollo Global and I Squared Capital's arm Think Gas had expressed interest in BPCL in November 2020, though Think Gas opted out later. Vedanta Resources was even reportedly planning to raise a $10-billion fund to buy the government's 52.98 per cent equity in the oil major.

The government intended to privatize BPCL by March 2021, but even financial bids have not been invited. One reason for the delay was the Covid pandemic.

When the privatization process was ongoing, BPCL last year sold its 61.65 per cent equity in the Assam-based Numaligarh Refinery Ltd (NRL) for Rs 9,875 crore. NRL sale, however, was not a privatization, as the company was bought by a consortium of two public sector companies, Oil India Ltd and Engineers India Ltd (49 per cent), and the Assam government (13.65 per cent).

The BPCL stock has been hovering around Rs 340 in the last few days, while in April 2021 it was trading in the Rs 418-422 range.

BPCL's market cap is around Rs 74,500 crore, which means that the government can get about Rs 38,000 crore by selling its stake in the company.

BPCL has over one-fourth share in the domestic fuel retailing segment. It also has more than one-seventh of the country's refining capacity.

For the current fiscal, the government has set a low, but realistic disinvestment target of Rs 65,000 crore. For 2020-21, the target was Rs2.1 lakh crore and for 2021-22, Rs1.75 crore. The realizations were very low -Rs32,845 crore in FY21 and Rs13,530 crore in FY22. The pandemic and the ensuing disruption played havoc with, among other things, the privatization process.