Disinvestment plan of BPCL halted; bidders backed out due to unstable fuel market, complex tax regime
A trade union leader said that two bidders – Apollo Global Management and I Squared Capital Advisors – backed out as they found “the bid not worthy enough to fight for”
Even as LPG prices rose for the second time this month, taking domestic LPG cylinder prices across the country over the Rs 1,000 mark, it has come to the fore that the Modi government had to halt the privatization bid of State-owned Bharat Petroleum Corporation Limited (BPCL) due to an unstable fuel market and complex tax regime.
The government’s stake in BPCL is worth around Rs 50,000 crore.
A trade union leader who is in the know of the development told NH that two bidders – Apollo Global Management and I Squared Capital Advisors – have backed out from the ambitious privatization plan as they found “the bid not worthy enough to fight for”.
The trade unionists termed the backing out of the two bidders, eventually forcing the government to halt the disinvestment plan, as a “blessing in disguise”.
“Modi govt’s inability to stabilize the domestic fuel market and an irrational, complex tax regime was responsible for the deal reaching a dead end before it could take off,” said the trade unionist.
After the two bidders chose to back out, Anil Agarwal-led Vedanta group remained the only bidder in the fray, following which the Modi government decided to halt the privatization plan.
The government did not want to proceed with a single bidder, news agency PTI reported.
The State-owned refiner Bharat Petroleum Corporation Limiter (BPCL) is one of the most successful PSUs in India, known as Navratna companies.
The plan to sell the government’s holding in BPCL was envisioned in 2019 wherein the government hoped to raise US $ 8-10 million by selling its 53 percent holding in the PSU.
A year after, in 2020, the government floated a bid, hoping that major players such as Russia’s Rosneft and Saudi Arabia’s Aramco might be taking interest in BPCL privatization plan, but due to low prices and weak demand, the big players stayed out of the bidding.
The Congress had at the time slammed the government, saying that “this government is going to sell India totally.”
It is worth recalling here that the government had to postpone the disinvestment in BPCL twice.
Interestingly, the Modi government has barred PSUs from bidding for BPCL and expects private sector Indian players and global MNCs to bid for its stake.