Global energy giants may join BPCL privatisation race

New Delhi: Global oil companies are likely to partner with major investment funds which already have submitted Expressions of Interest (EoI) for the state-run BPCL.

Along with Anil Agarwal-led Vedanta, Apollo Global Management, and Think Gas (promoted by I Squared Capital) are reportedly among parties who have submitted bids for the state-run energy major.

Major energy giants including Reliance Industries, Saudi Aramco, the UAE’s Adnoc, and the UK’s BP, have not placed interest for the state-run oil major so far.

It is now anticipated that some among these energy giants may team with global funds in a bid to acquire the state-owner refiner, said people in the know of things.

Recently, the Central government proposed to further sugarcoat the BPCL strategic sale deal for the interested investors by giving few more clarifications through a new set of frequently asked questions (FAQ).

Sources had said that the Department of Promotion of Investment and Internal Trade (DPIIT) may soon issue a clarification that the BPCL under new private sector owners would be free to bring in foreign direct investment (FDI) to the tune of the entire 100 per cent equity of the company without conditions.

Also, after privatisation, the BPCL would be free to exercise its right to stay or come out of the joint venture company that plans to build the world’s largest (60 million tonne) integrated refinery-cum-petrochemicals complex in Maharashtra’s Ratnagiri district at an estimated cost of Rs 3 lakh crore.

Moreover, the government is also looking to allow the BPCL to sell its stake in Petronet LNG and Indraprastha Gas Ltd, where the oil refiner is one of the promoters, before its own strategic sale.

This will prevent new owners ofthe BPCL from making mandatory open offers to the shareholders of these companies, an exercise that could increase the cost for the new investors by up to Rs 20,000 crore.

The government is selling its entire 53.29 per cent stake in the BPCL to a strategic investor to mobilise over Rs 52,000 crore as disinvestment receipt. Though started in 2019 when its disinvestment got nod, the BPCL’s disinvestment has been postponed on numerous occasions due to the pandemic related disruptions.

The proposal to clarify 100 per cent FDI permission for the new owners of the BPCL is required as the refiner is a PSU company right now, where only up to 49 per cent FDI is permitted.

Experts say that this clarification is essential as the government already allows 100 per cent FDI in the oil and gas sector and the case for the BPCL should be no different after it gets converted into a private entity.

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