No Reliance, no oil superpower in race to acquire BPCL

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On Monday, the stipulated deadline for BPCL bids, the government received ‘multiple’ bids for buying out its stake in India’s second-biggest fuel retailer BPCL. Negating all speculations, Reliance Industries as well as supermajors Saudi Aramco, British BP and French Total did not make a bid.

Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), which is handling the strategic sale, tweeted that the transaction advisors for the sale of government’s 52.98 per cent stake in Bharat Petroleum Corp Ltd (BPCL) have reported receiving “multiple expressions of interest.”

“The transaction will move to the second stage after scrutiny by transaction advisor (TA),” he said. “Strategic disinvestment of BPCL progresses: Now moves to the second stage after multiple expressions of interest have been received,” Finance Minister Nirmala Sitharaman also tweeted.

It is likely that about three to four bids were made to acquire BPCL. A clutch of private equity funds and/or pension funds having shown interest is more than likely. 

Reliance Industries, which was considered a potential bidder as BPCL would have added 22 per cent fuel market share to its fledgling retail business and made it the nation’s number one oil refiner, but failed to put in an expression of interest (EoI).

Saudi Arabian Oil Company (Saudi Aramco), which had been keen to enter the world’s fastest-growing fuel market, too did not put in an EoI. UK’s BP plc and Total of France – who have plans to foray into the Indian fuel market – had previously ruled themselves out of the BPCL race as they did not want to add oil refining assets when the world was moving away from liquid fuels.

Russian energy giant Rosneft-led Nayara Energy, which operates a 20 million tonne oil refinery at Vadinar in Gujarat and also has 5,822 petrol pumps, was considered a potential bidder for BPCL but did not put in a bid.  Abu Dhabi National Oil Co (ADNOC), which has ambitions for Indian market, too was considered a potential bidder. Mining billionaire Anil Agarwal is considered another potential bidder given his interest in the oil and gas business with his acquisition of Cairn India.

Now transaction advisors will evaluate the bidders to ascertain if they indeed meet the qualifying criteria and would have the financial muscle to do the acquisition. This process may take 2-3 weeks, thereafter request for proposal (RFP) will be issued and financial bids sought.

The USD 10 billion price would give buyer ownership of BPCL‘s three refineries – Mumbai, Kochi in Kerala and Bina in Madhya Pradesh – 17,138 petrol pumps, 6,151 LPG distributor agencies and 61 out of 256 aviation fuel stations in the country.

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