New Delhi Senior officials said the government is unlikely to restart the disinvestment process for Bharat Petroleum Corp Ltd (BPCL) this year due to volatility in the stock market and rising energy prices.
“We are not sure what the level of crude oil prices will be six months down the line. It will take time to go back to the drawing board and start the process all over again. It will not happen at least this year,” said one of the senior government officials, requesting anonymity.
A second official said the Department of Investment and Public Asset Management would focus on completing the ongoing transactions before reconsidering privatization.
State-run fuel retailers like BPCL are making losses as they battle rising global crude oil costs and retail fuel prices which have been kept unchanged since April to pacify inflation. The government has lined up over half a dozen companies for strategic sale, including Shipping Corp of India, BEML Ltd, NMDC’s Nagarnar Steel Plant and HLL Lifecare. The privatization of Central Electronics Limited (CEL) and Pawan Hans Limited has also been stalled due to legal challenges.
The government last month decided to call off the disinvestment of BPCL as the current circumstances in the global energy markets and due to the pandemic, interested parties could not continue. It said a decision on resuming the process would be taken after reviewing the situation.
The government on 7 March 2020 invited expressions of interest to sell its 52.98% stake in the fuel retailer and refiner and transfer management control to the buyer. The disinvestment proposal required bidders to include total assets of $10 billion and more than 51% state-owned public sector units.
The government received bids for BPCL from minor Vedanta Resources Ltd, private equity firm Apollo Global and I Squared Capital’s ThinkGas unit.
Mint, in its April 23 edition, had reported that the government was weighing options on strategic disinvestment, including whether it should be asked to come back to the drawing board and restart the bidding process or relax certain conditions in the current process. Needs to be modified so that the process proceeds.
On May 19, Mint had reported that Madhya Pradesh would come up with a new disinvestment plan for the central government-run power company after the completion of its green energy initiative of expanding Bina refinery and adding capacity to solar power. Wind, hydrogen fuel with 2G ethanol bio-refineries. Mint reported that the government does not plan to sell its shareholding in parts.
BPCL was considered as one of the major transactions under the new disinvestment policy of the government. Mint reported in January 2021 that the transaction could be priced at 90,000 crores. But since then the market cap of BPCL has fallen and this can only benefit the government. 37,000 crore at the current valuation.
The government has done a lot so far in the current financial year. 24,000 crore from CPSE disinvestment including public listing of LIC of India. Target has been set for the whole financial year 65,000 crores. In the last financial year, more Rs 13,500 crore was recovered through disinvestment including privatization of Air India.