New Delhi: After failing to attract bidders for the entire company, India is considering selling up to a quarter of state-run refiner Bharat Petroleum Corp Ltd, according to two officials, as the government's divestment initiative advances slower than planned, news agency Reuters reported. According to two government sources who declined to be identified, New Delhi is mulling soliciting bids for a 20 percent to 25 percent share in BPCL rather than selling the full 52.98 percent ownership outright.
According to officials, discussions concerning the initiative are in their early phases.
The government had hoped to collect $8-$10 billion by selling its whole interest in BPCL. After planning for four years, it requested bids in 2020, expecting major players such as Russia's Rosneft to be interested.
However, Rosneft and Saudi Aramco did not bid since low oil prices and weak demand at the time limited their investment intentions.
Even a partial sale of BPCL, according to government officials, is unlikely to be completed this fiscal year since the process would take more than a year.
According to one of them, inconsistent policies on fuel and diesel pricing have hurt sales potential.
"There were many issues but most recently petrol prices not being raised for four months between November and February were presumed due to elections by the government," the official was quoted by Reuters in its report.
In February, India had elections in five states, including the bellwether Uttar Pradesh, yet pump prices did not begin to rise until March 22, by which time Prime Minister Narendra Modi's Bharatiya Janata Party had won in four of the five states.
According to both officials, the present conversation began after all bidders withdrew from the process last month.
According to the company, the final bids were private equity firm Apollo Global Management and oil-to-metals giant Vedanta Group.
The reversal of BPCL's complete share sale reflects the government's poor progress on privatisation objectives.
Finance Minister Nirmala Sitharaman revealed intentions to privatise most state-owned enterprises, including banks, mining industries, and insurers, by 2020.
However, no progress has been achieved, and both officials stated that the government has postponed plans to sell any further banks this fiscal year, with the exception of IDBI Bank, which is majority held by Life Insurance Corporation of India. On Tuesday, LIC fell on its market debut after the government sold a 3.5 percent share.
(With Reuters Inputs)