Union government eyes Rs 90,000 crore from BPCL stake sale

The sale of BPCL's stake requires governments to meet the 21 trillion division target announced by the Finance Ministry in the budget for 2020-2021

New Delhi (Natural Energy News): BPCL share sale is required to meet the government's record 2.1 trillion division target announced by the Finance Ministry in the budget for 2020-21.

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The government is raising Rs 90,000 crore through the privatization of Bharat Petroleum Corporation Limited (BPCL), which is almost double the price the shares are trading at, with the finance ministry wanting to price some of its publicly held fuel retailers. A rival said, business rivals.

The government official said that the government's target for 52.98% stake is also based on the value of BPCL's assets, especially the prime land in cities, the government official requested anonymity.

“If anyone believes that the administration will examine BPCL only on the factor of its share rate, then they are incorrect. The government will also have to consider asset valuation. The share price of companies in the peer group will also have to be seen. “The administration should get at least Rs 90,000 crore. BPCL's investments are so enormous, this amount (Rs 45,000 crore) can be easily inferred by auctioning BPCL's assets without influencing the core business. "

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The official said that apart from Vedanta Group, two US funds - Apollo Global and I Square Capital - have submitted their Expressions (EOIs) to India's second largest fuel retailer.

The Department of Investment and Public Asset Management (DIPAM) is managing the privatization of the state-run refiner, while Deloitte Toche Tohmatsu is the India transaction advisor.

BPCL stock has lowered the market norm, like some other stocks of state-run companies, despite new highs in the market. BPCL shares rose Rs 2.05, or 0.54%, to Rs 383 on Friday, while the Sensex rose 0.25% to Rs 47,868.98.

"We assume BPCL has a probable value of 2x over the long-term market significance if the administration gives a safe taxation authority for the deal of gasoline and diesel, as the value of their over 16000 retail outlets based on RIL-British Petroleum is 80000." -100000 crores. And other similar global deal share sales at retail outlets. In addition, the refinery and terminal/depot networks could potentially add an enterprise value of around INR40000 crores depending on the replacement cost, product pipelines. , Petronet LNG over and above price like LPG, industrial fuels, ATF, lube, gas sales and stakes in IGL, ”said Gagan Dixit, vice president, institutional equity research, Elara Securities (India) Pvt Ltd.

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“However, 2020 saw a huge tampering of excise duty in gasoline and diesel, resulting in doubling of excise duty in diesel. We believe BPCL's valuation has been impacted and concerns have increased over potential bidders as direct fuel on CNG sales due to increased demand for expensive petrol and diesel competitive fuels such as trucks, electric vehicles, gasoline and diesel. Use will help, ”he said.


This share sale is required to meet the government's record 2.1 trillion division target announced by the Finance Ministry in the 2020-21 budget. India has so far raised about Rs 12,225 crore from disinvestment proceeds in this financial year.

The successful buyer will not only have a controlling stake in BPCL, but will also have access to 25.77% market share in India's fuel retail sector as well as 15.3% of India's refining capacity. BPCL regulates four oil refineries at Kochi, Mumbai, Bina and Numaligarh with a joint capacity of 38.3 MT per year.

In a email response, a Deloitte spokesperson said: "We are bound by confidentiality obligations and are unable to comment on customer-specific matters."

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An external spokesperson for Apollo Global said in an emailed response: "Apollo Global will not comment on queries sent."

India is the world's third largest crude oil buyer and a major refining hub in Asia, with an installed capacity of over 249.36 million tonnes through 23 refineries. Major Indian refiners include Indian Oil Corporation, Hindustan Petroleum Corp Limited, Naira Energy Limited (formerly Essar Oil) and Reliance Industries Limited.

Prime Minister Narendra Modi has said that India plans to increase its refining capacity from 400 mtpa to around 250 mtpa by 2025.

Earlier this month, Oil Minister Dharmendra Pradhan said that the privatization of state-owned BPCL has received three primary bids.

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