BPCL disinvestment: Guidelines on worker safety, asset stripping later

The federal government is promoting its whole 52.98% stake in India’s second-largest gas retailer and third-biggest oil refiner.

Preliminary expressions of curiosity or EoIs are due on September 30, which might be adopted by certified bidders being requested to submit monetary or value bids.

The Division of Funding and Public Asset Administration (DIPAM), erstwhile often called Division of Disinvestment, has issued clarifications on queries raised by potential bidders for the federal government stake in BPCL.

On a question on restrictions referring to worker safety, asset stripping, enterprise continuity and lock-in of shares, DIPAM mentioned, “This data shall be offered to the Certified Events (QIPs) within the RFP/ SPA (Request for Proposal/ Share Buy Settlement).”

Guidelines pertaining to labour legal guidelines are mentioned to be one of many many concerns that can information bids, notably these from international companies. A possible acquirer of BPCL might need to shed extra workforce, which is a typical legacy difficulty with all public sector items, in addition to strip among the non-essential property reminiscent of land and buildings.

BPCL will give the acquirer prepared entry to 15.33% of India’s oil refining restrict and 22% market share of the world’s fastest-growing gas market.

Whereas the acquirer of presidency stake should make the necessary open provide to purchase 26 per cent stake from minority shareholders of BPCL on the identical phrases, the federal government suggested the bidders to seek the advice of their authorized counsels on the problem of such presents turning into necessary for listed entities the place BPCL might maintain a stake.

The division clarified this in response to the query that “whether or not a compulsory tender provide might be triggered by the transaction in relation to Indraprastha Gasoline Ltd and Petronet LNG Ltd”.

BPCL is a promoter of India’s largest fuel import, Petronet with a 12.5 per cent stake. It is usually co-founder and promoter of IGL, which retails CNG the nationwide capital area. BPCL holds 22.5 per cent stake in IGL.

The federal government stake sale in BPCL would occur after the corporate’s Numaligarh refinery in Assam is hived off from the corporate and bought to a public sector unit.

“The divestment of BPCL’s curiosity in Numaligarh Refineries Ltd (NRL) shall be accomplished earlier than the closing of the BPCL disinvestment course of,” DIPAM mentioned.

“The choice with regard to the utilization of proceeds from the NRL sale shall be communicated to QIPs previous to submission of economic bid.”

It additionally requested the bidders to hunt the opinion of authorized counsel’s on software of anti-monopoly laws.

“The profitable bidder might must file with the Competitors Fee of India (CCI) for its approval to the acquisition,” it mentioned. Additionally, bondholders/ lenders consent, if required, might be taken at an acceptable stage, it mentioned.

It was requested if holds of USD 1.65 billion bonds can not block or pre-empt the sale of presidency stake.

The federal government dominated out altering the requirement of bidder or the consortium of bidder collectively having a internet value of USD 10 billion. “Request for discount of internet value standards can’t be accepted,” it mentioned.

It additionally didn’t settle for a proposal of shifting the venue of the arbitration, arising in case of dispute within the privatisation course of, to a impartial discussion board reminiscent of Singapore.

“Not acceptable,” DIPAM mentioned including the venue of arbitration is New Delhi, India.

“If a certified IP ( get together) has submitted its EOI independently of every other and subsequently needs to kind a consortium for the bid, then the identical is permitted, offered the consortium is shaped inside 45 days of it being certified as a QIP,” DIPAM mentioned.

Nevertheless, this may solely be permitted as long as such QIP is the lead member of the consortium. Moreover, every of the consortium members needs to be certified for the bidding.

“The place two sole bidders have certified primarily based on the EoIs submitted by every of them independently, the formation of a consortium by these sole bidders is not going to be permitted. Equally, in case two consortia have been certified primarily based on the EoIs submitted by them independently, then their consolidation right into a single consortium shall not be permitted,” it added. PTI JD ANZ MR MR

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