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India Seeks Bids to Sell BPCL, Keeps State Players Out

Debjit Chakraborty

(Bloomberg) -- India is seeking preliminary bids for the privatization of state-run refiner Bharat Petroleum Corp. as Prime Minister Narendra Modi speeds up asset sales to help plug the budget gap.

The government plans to sell about 1.15 billion shares, its entire stake of roughly 53%, according to a memorandum. It’s inviting both domestic and foreign suitors in the private or public sector, and they can submit bids individually or as part of a consortium. The deadline is May 2.

Indian state-run entities, in which the government owns a stake of at least 51%, won’t be eligible to participate in the bidding, according to the document posted on the Department of Investment & Public Asset Management’s website.

India will set the reserve price for the sale after receiving the bids. The selected bidder will have to make an open offer to acquire at least another 26% stake from minority shareholders, and put the money in escrow for the entire offer.

Potential investors must have a minimum net worth of $10 billion in their latest financial statements to be eligible to bid for the refiner. The company, often referred as BPCL, is the third-biggest refiner in India and second-largest fuel retailer. It has a market share of 21% in the financial year which ended March 2019.

The current offering will include the entire business of BPCL except for its 61.65% holding in Numaligarh Refinery Ltd., which the Indian government plans to transfer to a state-run oil and gas company.

BPCL group comprises of 10 subsidiaries, 24 joint ventures and 12 associate companies with operations across the hydrocarbon value chain both in India and overseas, according to the document.

India, the world’s third‑largest consumer of oil, is a potential bright spot for demand because of an increasing middle-class. Its oil consumption growth is expected to surpass China’s by the middle of this decade, the International Energy Agency predicted in January, making it “a very attractive market for refinery investment.”

That’s luring interest from companies such as Saudi Aramco and France’s Total SA and prompting existing players such as Royal Dutch Shell Plc to expand. Several top oil producers from the Middle East and Russia’s Rosneft PJSC have shown interest in buying BPCL, a government official said last month.

India is expecting to complete the sale of BPCL by September, according to Tuhin Kanta Pandey, secretary for disinvestment.

The sale, potentially the country’s biggest privatization, is crucial for the government because it needs to raise resources for its spending programs to prop up the economy as growth in tax collections moderates. Prime Minister Modi’s administration is aiming for a record $29 billion from the sale of assets to narrow its budget deficit in the year that starts April.

In all, the federal government aims to sell stakes in more than two dozen of about 300 state enterprises in the next fiscal year.

(Updates with details of offering from sixth paragraph)

To contact the reporter on this story: Debjit Chakraborty in New Delhi at dchakrabor10@bloomberg.net

To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Stanley James

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