BPCL privatization: Bid To Close Today, All Eyes On Reliance

BPCL privatization: Bid to close today, all eyes on Reliance. Initial bids for privatization of BPCL (Bharat Petroleum Corporation Limited) will close on Monday i.e. today.

There are indications that big companies like BP of Britain, Total of France, and Saudi Aramco are unlikely to bid.

The government is selling its entire 52.98 percent stake in BPCL, the second-largest oil refinery, and marketing company in India.

Govt has on four occasions moved the compliment of filing an Initial Interest Letters (EOI). The current deadline is 16 November.

The Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said last month that the deadline would not be extended anymore.

Industry sources said BP and Total are unlikely to bid, and there are reports that Russia’s major energy company Rosneft or its affiliates and Saudi Arabian oil company (Saudi Aramco) are not very willing to bid, given the price Huh.

He said that at a time when the world is moving away from conventional fuels, the price is close to the US $ 10 billion.

In addition, the covid-19 epidemic has reduced demand for traditional fuels and the use of hydrogen and battery-powered electric vehicles may increase faster than expected.

The government holds a 52.98 percent stake in BPCL at Rs 47,430 crore at a closing price of Rs 412.70 on BSE on Friday.

Also, the acquirer will have to make an open offer to buy a 26 percent stake from the public, which will cost Rs 23,276 crore.

Sources said BPCL makes a profit of around Rs 8,000 crore annually and at this pace, it would take 8-9 years for the investor to recover more than Rs 70,000 crore of the bid.

The acquisition seems to be more profitable for companies that can increase profits by operating with the business as well as synergies with existing businesses.

Billionaire businessman Mukesh Ambani-led Reliance Industries Ltd (RIL) could be one such company.

RIL operates the world’s largest oil refining complex at Jamnagar in Gujarat and intends to expand into the retail business.

Reliance has so far maintained silence over its intentions regarding BPCL.

Reliance recently appointed Sarthak Behuria, former chairman of BPCL, and also appointed former chairman of Indian Oil Corporation (IOC), Sanjeev Singh, a few weeks ago.

According to sources, these appointments may be linked to the desire to bid for BPCL.

Sources said the decision seems logical as Reliance can combine its Jamnagar refinery with BPCL’s Mumbai, Kochi, and Bina units and merge more than 1406 of its fuel stations with BPCL’s 17,138 petrol pumps.