Govt considering FDI policy tweak for BPCL privatisation
NEW DELHI: The government is considering a tweak in the current foreign direct investment (FDI) policy to allow overseas investors pick up majority stake in the India’s second biggest oil refiner Bharat Petroleum Corp Ltd (BPCL), sources said.
The government is privatising BPCL and is selling its entire 52.98% stake in the company.
For BPCL privatisation, mining-to-oil conglomerate Vedanta had put in an expression of interest (EOI) for buying the government’s 52.98% stake in the PSU. The other two bidders are said to be global funds, one of them being Apollo Global Management.
The proposal is under discussion between the departments of disinvestment (DIPAM), industry (DPIIT) and economic affairs (DEA), they said.
At present, only 49% FDI is permitted through automatic route in petroleum refining by the public sector undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUS. With this provision, a foreign player would not be able to buy more than 49% stake in BPCL.
According to sources, DIPAM has suggested to amend the existing FDI policy in order to allow 100% foreign direct investment in a central public sector enterprise (CPSE) in the petroleum and natural gas sector.
On the other hand, the Department for Promotion of Industry and Internal Trade (DPIIT) has proposed for a separate provision for this specific situation. The proposed amendment to the FDI policy is under consideration for enabling investment in BPCL as part of the disinvestment process, they added.
On Thursday, Bharat Petroleum Corp. Ltd’s (BPCL) shares scaled to a new 52-week high on the National Stock Exchang. A handsome dividend payout and strong March quarter performance are the reasons for investor optimism.
BPCL has announced a dividend of ₹58 per share. This is in addition to the ₹21 per share dividend announced earlier in the year. Accordingly, at the current market price, BPCL’S total dividend payout of ₹79 per share translates into almost a 17% dividend yield for financial year 2021. The proceeds from the treasury stock sale and Numaligarh Refinery Ltd (NRL) stake sale have been passed on to investors as dividend. It had completed the sale of its entire 61.65% stake in NRL for about ₹9,876 crore to a consortium of Oil India Ltd and Engineers India Ltd, and Assam government. Besides, it had sold treasury shares TOO—BPCL equity shares held by the BPCL Trust for about ₹5,510 crore.