All eyes would be on the bidders of state-owned refiner BPCL where the last date for the submission of expressions of interest is Monday, with the Centre making it clear it would not extend the date any further after pushing the deadline back as many as four times amid disruptions caused by the coronavirus.
Analysts, however, are not ruling out surprises: the changes in the US political landscape and positive developments on the Covid-19 vaccine could help to boost future energy prices, which is key to the bidding.
The government plans to sell its entire 52.98 per cent stake in BPCL and has extended the deadline four times, with the present one being November 16.
“Transaction advisers are in touch with our potential investors, they have not got back to us with a request for an extension,” Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey said.
The government has eased the bidding norms by allowing the bidders to submit their EoIs via email with all the requisite documents.
Sources said the BPCL disinvestment has received interest from several large global oil and gas companies and a few Indian entities as well. There have been close to 100 enquiries which is a clear signal of investor interest.
Analysts said Abu Dhabi National Oil Co (Adnoc) and Exxon Mobil could participate apart from some Indian companies such as Reliance.
Reports suggest the world’s largest oil producer Saudi Aramco and Rosneft of Russia may not participate because of soft oil prices and fragile demand conditions.
However, with Democrat Jo Biden winning the US presidential elections and the prospects of Pfizer developing a vaccine, the outlook in the energy sector has improved.
“Developments such as a change in leadership in the US and positive news related to the Covid-19 vaccine are expected to soon boost global economic recovery. This, in turn, is likely to drive oil demand,” brokerage Motilal Oswal said.
The brokerage said the forecast for a rise in oil demand for the next calendar year stands at 6.5 million barrels of oil per day against a projected daily loss of 9.5 million barrels in 2020.
Refining margins, which have averaged at $0.3 per barrel in 2020, are also likely to rise with an increase in demand for petroleum products, Motilal Oswal said.
The delay has complicated the chances of receiving the divestment proceeds from the sale of the refiner, which is critical to meet the target of Rs 21.1 lakh set by the Centre in the budget for this fiscal.
The devastating impact of the coronavirus on the economy has put the strain on the Centre's finances at a time revenues have shrunk, forcing the government department to cut back on spending.
After the EoIs, the government will open a data center for the interested bidders to do due diligence of the books of the company and its operations after which financial bids will be called. The bids will have to be evaluated and approved by the cabinet and the transaction will close once the payment is made, sources said. The government has barred PSUs from the bidding.
The government has proposed a strategic disinvestment of its entire shareholding in BPCL — comprising 114.91 crore equity shares, or 52.98 per cent of share capital — along with the transfer of management. BPCL will not sell its 61.65 per cent stake in Numaligarh Refinery to the strategic buyer. The Numaligarh stake will be sold to a state-owned oil and gas company.
The Centre has allowed prospective bidders with a minimum net worth of $10 billion. A maximum of four members are permitted in a consortium, with the lead member holding 40 per cent. Other members must have a net worth of $1 billion. The EoI allows changes in the consortium within 45 days, though the lead member cannot be changed.
