Indian Government’s endeavour to privatise Bharat Petroleum Corp. has hit a roadblock as potential bidders struggle to find partners to reduce the rate of financial risk with buying the state-run refiner-cum-fuel retailer.
According to sources, the three potential suitors — the Vedanta Group, Apollo Global Management and I Squared Capital — have been in talks with several global energy giants and pension funds but have not found success in finalising partners for the BPCL bidding.
The reluctance of the companies to invest in the fuel retailer stems largely from the newly adopted sustainability rules and the global action of energy transition in light of the increasing risk posed by climate change, sources claimed. Moreover, the ramifications of the pandemic have also become a cause of apprehension, discouraging firms from making large-scale investments in the fossil fuel sector.
The hindrance in the process of finalising bidders for the sale is expected to slow down what is being termed as the nation’s biggest privatization drive. The selling of BPCL is estimated to generate $13 billion for the government, which holds a 53 per cent stake in the entity, and other shareholders.
The sources further added that the high valuation of BPCL has compelled the government and potential investors to look out for a consortium of bidders that can provide a strong technical and financial foundation for the acquisition.
“Bidders are conducting due diligence, but uncertainties over the bidder consortium and process complexity, including valuation may lead to potential delays,” American-based credit rating agency Fitch Ratings Ltd. predicted last month.
The slow-paced privatisation process of BPCL is likely to clash with the Centre’s aim to conclude the selling process by the end of the current financial year in March, for which the bidding process was scheduled to commence in November.
