BPCL Divestment: Investors seek clear policy direction

Bidders for the government's stake in Bharat Petroleum Corp (BPCL) have sought more clarity on autonomy in the pricing of fuel products. They also want the government to give a realistic timeline for the blending of ethanol with petrol to give them more flexibility.

Bidders are keen on clarity about these issues as despite deregulation, oil marketing companies do not enjoy full freedom on fuel pricing, sources said.

The Centre is planning to sell its entire 53% stake in BPCL. The Cabinet had cleared the strategic sale in November 2019. Expressions of interest (EoIs) were invited in March 2020.

However, despite BPCL having access to more than 14% of India's oil refining capacity and 23% of the fuel market share, none of the big energy players submitted an EoI.

The three contenders now for the company are Anil Agarwal-led Vedanta Group, Apollo Global Management and Think Gas, backed by private equity major I Squared Capital.

"The petrol and diesel prices are deregulated, but still there is an invisible cap on it. The private players want clarity about if the government will allow them flexibility in product pricing," one of the people said.

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Despite a spike in international prices of crude, local fuel prices have remained static. Industry watchers expect a sharp rise in prices once the ongoing assembly elections are over.

Oil marketing companies also have limited autonomy in launching products.

For instance, in petrol, while BPCL offers normal petrol at Rs 95.41 per litre, BPCL Speed is priced at 98.46, on a much higher side, and are generally used in high-performance cars.

Bidders want to know if more premium products in normal fuel prices as well as ethanol blending which will earn them higher margin can be allowed.

BPCL owns 35.30 million tonnes of oil refining capacity spread over three refineries at Mumbai, Kochi in Kerala and Bina in Madhya Pradesh. It has 18,768 petrol pumps and 6,169 LPG distributors. Its buyer will also get a sizable overseas presence with 26 assets in eight countries apart from India: Russia, Brazil, Mozambique, the UAE, Indonesia, Australia, East Timor and Israel.

Earlier this month, Tuhin Kant Pandey, secretary at the Department of Investment and Public Asset Management (Dipam), acknowledged that bidders were lukewarm to the idea of financial bids and the government was trying to reach out to them through the transaction advisor.

The Open Magazine of India by Artmotion Network (

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