Vedanta Group has filed an Expression of Interest to buy the government’s 52.98 percent stake in BPCL.
The government is selling its entire 52.98 percent stake.
After declaring dividend of Rs 58 per share, the government is moving fast towards disinvestment of BPCL. The government is considering changes to the existing Foreign Direct Investment (FDI) policy to allow foreign investors to take a majority stake in Bharat Petroleum Corporation Limited (BPCL), India’s second largest oil refinery. Sources gave this information. The government is privatizing BPCL and is selling its entire 52.98 percent stake in the company.
The Vedanta group had filed an Expression of Interest to buy 52.98 percent stake in the government in BPCL. It is being told that the other two bidders are global funds, one of which is Apollo Global Management. Sources said that a proposal in this regard is under discussion between the Department of Disinvestment (DIPAM), the Department of Industries (Azhaghau) and the Department of Economic Affairs (DEA).
According to the current rule, only 49 percent stake is allowed to be sold
Presently, only 49 per cent FDI is allowed through automatic route in petroleum refining operated by public sector undertakings (PSUs) and this can be done without any disinvestment or dilution of domestic equity of existing PSUs. With this provision, no foreign player will be able to buy more than 49 percent stake in BPCL.
DIPAM has allowed 100% FDI
According to sources, DIPAM has suggested amending the existing FDI policy to allow 100 per cent FDI in Central Public Sector Enterprises (CPSEs) in the petroleum and natural gas sector. On the other hand the Department of Industry and Internal Trade Promotion (DPIIT) has suggested to make a separate provision for this particular case.
news of stake sale was coming
Bharat Petroleum Corporation Limited (BPCL), which is undergoing privatization process, clarified on Thursday that it had no intention of selling its stake in Petronet LNG Limited and Indraprastha Gas Limited (IGL). Earlier it was being said that there would be no need to bring an open offer to the new owner of BPCL by selling some of their stake in these two gas companies.
12.50 percent stake in Petronet
BPCL holds 12.5 percent stake in Petronet, India’s largest liquefied natural gas (LNG) importer and 22.5 percent in gas marketing company IGL. BPCL is the promoter of both listed companies and holds a position on their board of directors. As per the legal status assessed by the Department of Investment and Public Asset Management (Deepam), the acquirer of BPCL will have to make an open offer for the acquisition of 26 per cent of the shares before minority shareholders of Petronet and IGL.
No intention to sell stake in Petronel and IGL
Deepam is running the process of selling the entire 52.98 percent stake of the government in BPCL. “There is no intention to sell our stake in Petronel and IGL,” said N. Vijay Gopal, director of finance department of BPCL. This will significantly reduce the value of the company. “According to SEBI regulations, the new promoter of BPCL will need to make an open offer for IGL and Petronet.”
BPCL not in favor of selling stake
Without giving any more information, he said, “BPCL and the government are working together with SEBI on how to save from the requirement of open offer.” We are working with the government so that the value of BPCL does not come down.” BPCL is not in favor of selling the stake and says that giving up promoter status and directorship will bring down the company’s value significantly. It may be noted that BPCL is the promoter of both the companies and since there will be a change in the ownership of the promoter firm, an open offer has to be made under the SEBI (Substantial Acquisition and Control of Shares) Act, 2011.
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