Disinvestment: BPCL’s NRL stake sale to fetch over Rs 5,000 crore for Centre

Ahead of privatisation of Bharat Petroleum Corporation (BPCL), the board of the fuel-retailer-cum-refiner on Monday approved sale of the company’s 61.65% stake in Numaligarh Refinery (NRL) which will garner about Rs 5,232 crore to the Centre as special dividend.

“Privatisation process of BPCL moves ahead with BPCL Board deciding to exit from NRL at a consideration of Rs 9,875.96 crore for its 61.65% stake with transfer of control. OIL, EIL and Government of Assam will be picking up the stake,” department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey tweeted. The Centre holds 52.98% stake in BPCL. “Special dividend will be taken out at appropriate time,” another senior DIPAM official said.

BPCL operates four refineries in India, Mumbai Refinery, Kochi Refinery, BORL-Bina Refinery and NRL with a combined crude oil refining capacity of 38.3 MMTPA (766 KBPD). BPCL’s stake in NRL is not part of the Centre’s offer to sell its entire stake in BPCL to a strategic buyer.

The value of the Centre’s 52.98% stake in BPCL, which was down 35% to Rs 39,000 crore as on October 16, 2020, from Rs 60,000 crore in November 2019 (around the time the stake sale proposal was approved by the Union Cabinet), has recovered to Rs 52,280 crore as on Monday. However, the actual receipts will depend on valuation and consideration of a premium.

Even though DIPAM has set a target to complete the BPCL transactions by June-end, the government may have to give shortlisted bidders a little bit of extra time if needed to complete their due diligence of the companies and their assets. In November, three bidders showed interest for BPCL buyout — Vedanta, Apollo Global Management and Think Gas.

On Monday, the government has also received multiple expression of interest for its 63.75% stake in Shipping Corporation of India (SCI) worth about Rs 3,080 crore at the current market prices. “Multiple expressions of interest have been received for privatisation of Shipping Corporation of India Limited. The transaction will now move to the second stage (financial bids),” Pandey tweeted.

BPCL and SCI privatisation are part of the government’s target of mobilising Rs 1.75 lakh crore in disinvestment receipts in FY22 compared with the revised target of Rs 32,000 crore in FY21.