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BPCL selloff doubt this fiscal

If selloff fails, fiscal deficit target will be in jeopardy
The government has for the third time extended the deadline for the submission of EOIs for BPCL to the end of September.

Our Special Correspondent   |   New Delhi   |   Published 10.08.20, 03:48 AM

The strategic sale of the  government’s 53 per cent stake in state-owned refiner BPCL is unlikely this fiscal, which can impact the Modi-government’s disinvestment targets. 

Senior government officials were not hopeful of the deal going through in the current fiscal. They said one has to see how the situation develops after September, the new deadline to submit the expressions of interest (EoI).

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The officials pointed out it takes around 9 months to 12 months for a selloff exercise. If bidders submit EoIs by September, they will get access to the data room to study the financials of the BPCL. Given the restrictions on international travel, it would be naive to expect the global bidders to travel immediately, the officials said. 

The government has for the third time extended the deadline for the submission of EOIs for BPCL to the end of September, which has put a question mark on the Centre’s ability to achieve the ambitious disinvestment target of Rs 2.10 lakh crore set for the current fiscal.

Finance minister Nirmala Sitharaman in her budget had stated that the government plans to garner Rs 1,20,000 crore from the selloff in PSUs and another Rs 90,000 crore from the sale of the government’s stake in banks and financial institutions.

The ambitious divestment target depends heavily on the proceeds from the strategic divestment of public sector companies such as BPCL, Container Corp and Shipping Corp, along with the listing of insurance behemoth LIC.

Analysts said the lower than expected disinvestment collection would have an impact on the fiscal deficit. The fiscal deficit has zoomed to 83.2 per cent, or Rs 6.62 lakh crore, of the full year’s budget estimates by the end of June, hit by poor tax revenues and rising expenditures because of the lockdown.

Analysts estimated the stake sale would garner Rs 70,000-80,000 crore to the government. However, with the global oil giants reportedly showing interest, the stake sale could fetch Rs 1.2 lakh crore. 

Sources have said Saudi Aramco, Abu Dhabi National Oil Co (Adnoc), Rosneft of Russia, Exxon Mobil and Reliance are likely to participate in the bidding.

According to the offer for sale, the government is proposing the strategic disinvestment of its entire shareholding in BPCL comprising 114.91 crore equity shares, which constitute 52.98 per cent of equity, along with the transfer of management control to a strategic buyer. The sale excludes  BPCL’s shareholding of 61.65 per cent in Numaligarh Refinery Ltd.

The bidding will be a two-stage affair, with qualified bidders in the first EoI phase being asked to make a financial bid in the second round.



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