Divestment of BPCL off the table for now, says Hardeep Singh Puri

The disinvestment plans for Bharat Petroleum Corporation (BPCL) are currently off the table as the government has not received a sufficient number of bids, Minister for Petroleum and Natural Gas Hardeep Singh Puri has said.

“We want to disinvest, but we cannot have a situation where there’s only one bidder. In the last year or so, we’ve been facing a bit of turbulence but despite that BPCL has done very well. For now, it (the divestment) is not on the table,” Puri said on the sidelines of the 25th Energy Technology Meet in Mumbai.

The government owns a 52.98 per cent stake in the oil major. But potential buyers who had shown interest, including the Vedanta Group, Apollo Global Management, and private equity major I Squared Capital-backed Think Gas, had struggled to find partners to finance the deal. In May, the government had called off the earlier process for inviting expression of interests (EOIs) for the strategic disinvestment of BPCL.

“Owing to prevailing conditions in the global energy market, the majority of QIPs (qualified interested parties) have expressed their inability to continue in the current process of disinvestment of BPCL,” the Department of Investment and Public Asset Management had said. However, the government had not fully shut down its plan to offload stake, having stated that it will decide on the BPCL divestment process and re-initiate it in due course.

Puri’s latest comments have put to rest reports earlier this month that said the Centre was reviving the disinvestment process for the oil major. Mirroring the minister’s statement, an official with the petroleum and natural gas ministry said no further move towards disinvestment is expected in the near term.

Story till now

Till early 2020, before the pandemic hit India, government officials were confident that BPCL would sell before Air India, as it was a profitable company and an attractive prospect for global energy giants wishing to get access to the Indian retail oil market. That has not come to pass.

Officials had earlier told Business Standard that the process had stalled as a result of many bidders not having found partners to form a consortium to finance the deal. This is due in part to the fact that there continues to be considerable global macro-economic uncertainty over the Covid-19 pandemic. The continuing volatility in the energy markets as a result of the Russian invasion of Ukraine has also not helped the process.

Moreover, the due diligence for the sale of BPCL has taken longer than anticipated. Interested bidders had got access to the refiner’s financial data in April, but have seen delays in completing due diligence on account of disruptions owing to the pandemic.