New Delhi Government closed the strategic sale of Bharat Petroleum Corporation Limited (BPCL) after companies that had shown initial interest in buying the country’s second-largest state-run refiner changed their minds because of the potential for Indian refiners. The outlook had turned sour due to the pandemic and rising. Global energy prices forced them to sell fuel for less than they cost.
The Department of Investment and Public Asset Management (DIPAM) said in a statement on Thursday that a decision on restarting the strategic disinvestment process would be taken after reviewing the situation.
“Several Covid waves and geopolitical conditions impacted many industries globally, especially the oil and gas industry. Due to the prevailing conditions in the global energy market, the majority of Qualified Interested Parties (QIPs) have expressed their inability to continue with the current process of disinvestment of BPCL,” the department said.
“Based on the decisions of the Alternative Mechanism (Empowered Group of Ministers), the Government of India has decided to discontinue the current EOI (Expression of Interest) process for strategic disinvestment of BPCL, and the EOI received from the QIP shall stand cancelled, ” added the department.
Indian fuel retailers like BPCL are suffering because they have failed to pass on the rising crude oil prices to the consumers. Crude oil prices rose after Western countries imposed sanctions on Russia, one of the world’s biggest energy producers, after its invasion of Ukraine in February.
Rising oil prices and increasing inclination towards green energy have created new issues for the bidders, posing challenges to the disinvestment process.
The Expression of Interest, or EOI, for the strategic disinvestment of BPCL was issued on 7 March 2020. In a strategic disinvestment, the government was set to sell its absolute stake of 52.98% in the public sector enterprise and transfer management control to its overall share. disinvestment strategy.
Bidders for the disinvestment proposal must have a net worth of $10 billion and must not include public sector units with government ownership of 51% or more. The government received bids for BPCL in November 2020 from minor Vedanta Resources Ltd and private equity firms Apollo Global and ThinkGas, an arm of I Squared Capital. Vedant was the only player in the field after Think Gas was out.
Crude oil price in India stood at $33.36 per barrel in March 2020, when BPCL’s EOIs were issued. According to the Petroleum Planning and Analysis Cell data, in FY20, the average price stood at $60.47 per barrel, falling to $44.82 in FY21, but rising sharply to $79.18 in FY22.
Mint reported on April 23 that the government is weighing its options on strategic disinvestment, including whether it needs to return to the drawing board and restart the bidding process or modify certain conditions so that process proceed.
On May 19, Mint reported that the Center has prepared a new disinvestment plan for BPCL after the completion of its green energy initiative of expanding Bina refinery in Madhya Pradesh and adding capacity with 2G ethanol bio in the solar, wind and hydrogen sectors. Will do – Refinery.
An official had earlier said that the value that the government will get from the deal is an important factor as BPCL’s share price has fallen in the past one year.
In April 2021, the stock was trading in the range of 418 to 422, but this April, it fell 374-390 range. Shares fell 0.54% on Thursday 324.25 on BSE. At the current share price, the value of BPCL is 70,338 crore, maximum 90,000 crore back in November 2020 when it received bids. about the government 37,265 crore from transactions at current valuation. In March 2021, BPCL sold its 61.65% stake in Numaligarh Refinery Limited for 9,875 crore to Assam and a consortium of Oil India Limited and Engineers India Limited as part of the privatization process.