April 09, 2020

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India opens bidding for its stake in BPCL
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Photo courtesy of BPCL

The government is inviting bids for the sale of its entire 52.98% stake in India’s state-owned oil company, Bharat Petroleum Corporation Limited (BPCL).  Deloitte Touche Tohmatsu India LLP has been appointed as the transaction advisor for the stake sale.

The Centre will set the reserve price for the stake sale after receiving bids and the selected bidder will have to make an open offer to acquire at least another 26% stake from minority shareholders, and put the money in escrow for the entire offer, according to the bid document  issued by the Department of Investment and Public Asset Management. Interested parties must have a minimum net worth of USD10 billion.

“CPSEs and central government owned cooperative societies–where the government ownership is 51% or more–are not eligible to participate in the proposed transaction,” the bid document said.

The last date for the submission of expressions of interest is 2 May.

BPCL, India’s third largest refiner, currently operates four refineries in India – Mumbai Refinery, Kochi Refinery, BORL-Bina Refinery (Bharat Oman Refineries Limited, a joint venture between Bharat Petroleum and Oman Oil Company), and the Numaligarh Refinery – with a combined crude oil refining capacity of 38.3 million metric tons per annum (MMTPA). It has a market share of 21%.

After being established in the 1920s as Burmah Shell, an alliance between Royal Dutch Shell and Burmah Oil Co and Asiatic Petroleum (India), BPCL was nationalized in 1976 by an Act of Parliament.

In November, the Union Cabinet approved the government’s proposal to divest its entire shareholding in BPCL, along with the transfer of management control to a strategic buyer after taking out the Numaligarh Refinery Ltd. in Assam from the company’s portfolio. The refinery will be hived off before BPCL’s privatisation ,and will be taken over by another state-owned company, finance minister Nirmala Sitharaman said at the time.

BPCL’s net profit for the quarter ending December 2019 jumped nearly three times to INR2,051.43 crore (USD276.7 million) from INR698.62 crore (USD94.2 million) in the year-ago period. Revenue from operations fell to INR85,926.70 crore (USD11.6 billion) from INR89,324.86 crore (USD12 billion)  a year ago, due to the decline in global oil prices.

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