June 2, 2023

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“there is more visibility on BPCL privatization”: Fitch Ratings

Fitch Ratings on Friday said there is more visibility on BPCL privatisation, but there is still little information on potential restrictions for the new owner in relation to employee protection, asset stripping, and investment lock-in.
Also, there is a need for further clarity on the future of subsidies paid to BPCL’s customers on the sale of LPG and kerosene as well as the freedom on the pricing of petrol and diesel before the divestment can conclude, it said.
The government is selling its entire 53.98 per cent stake in India’s second-largest fuel retailer Bharat Petroleum Corporation Ltd (BPCL). Three firms, including Vedanta Ltd, have evinced interest in buying the stake.
“There is more visibility on the progress of the state of India’s divestment of BPCL, following developments on key queries raised by potential buyers, but multiple steps of the process remain outstanding and there are still questions that require further clarity,” Fitch Ratings said in a statement.
BPCL has made headway on a key pre-condition to its divestment and other key milestones over the last six weeks, including the finalisation of terms to purchase Oman Oil Company’s 36.6 per cent stake in its Bina refinery for Rs 2,400 crore in February 2021.
It also sold 5.8 per cent of its 7.3 per cent treasury shares for Rs 5,500 crore and approved the sale of its 61.7 per cent stake in Numaligarh Refinery Limited for Rs 9,900 crore in March.
“This results in net proceeds of Rs 13,000 crore for BPCL, less the long-term capital gains tax, although the timing of each transaction may vary,” Fitch said, adding the impact on BPCL’s Standalone Credit Profile (SCP) will depend on the extent to which the proceeds are used to reduce debt or make dividend payments in the coming year.
Report by Chetali S M
Reported on – 19/03/2021

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