24/10/2021

Tannochbrae

Built Business Tough

BPCL privatisation: Govt rules on worker protection, asset stripping later

The federal government will give assistance on personnel security, asset stripping and company continuity in Bharat Petroleum Corp Ltd (BPCL) to likely acquirers of the organization only at a later on stage of bidding, according to privatisation rules issued by the disinvestment division.

The federal government is advertising its full fifty two.ninety eight per cent stake in India’s 2nd-premier gas retailer and third-major oil refiner.

Preliminary expressions of fascination or EoIs are thanks on September 30, which will be adopted by qualified bidders being asked to post money or rate bids.

The Office of Investment and General public Asset Management (DIPAM), erstwhile identified as Office of Disinvestment, has issued clarifications on queries raised by likely bidders for the federal government stake in BPCL.

On a question on limits relating to personnel security, asset stripping, company continuity and lock-in of shares, DIPAM stated, “This info shall be furnished to theQualified Intrigued Parties (QIPs) in the RFP/ SPA (Ask for for Proposal/ Share Acquire Arrangement).”

ALSO Study: BPCL to supply its staff inventory alternatives at a third of industry rate

Guidelines pertaining to labour guidelines are stated to be one particular of the many issues that will information bids, specially these from international companies. A likely acquirer of BPCL could want to lose surplus workforce, which is a typical legacy concern with all general public sector units, as perfectly as strip some of the non-crucial assets these kinds of as land and buildings.

BPCL will give the acquirer ready accessibility to 15.33 per cent of India’s oil refining restrict and 22 per cent industry share of the world’s fastest-escalating gas industry.

Even though the acquirer of federal government stake will have to make the required open supply to purchase 26 per cent stake from minority shareholders of BPCL on the identical terms, the federal government recommended the bidders to seek the advice of their legal counsels on the concern of these kinds of presents turning into required for mentioned entities where by BPCL could maintain a stake.

The division clarified this in reaction to the query that “no matter whether a required tender supply will be activated by the transaction in relation to Indraprastha Fuel Ltd and Petronet LNG Ltd”.

BPCL is a promoter of India’s premier gas import, Petronet with a 12.five per cent stake. It is also co-founder and promoter of IGL, which retails CNG the nationwide money region. BPCL retains 22.five per cent stake in IGL.

The federal government stake sale in BPCL would transpire immediately after the company’s Numaligarh refinery in Assam is hived off from the organization and marketed to a general public sector unit.

“The divestment of BPCL’s fascination in Numaligarh Refineries Ltd (NRL) shall be concluded ahead of the closing of the BPCL disinvestment process,” DIPAM stated.

“The conclusion with regard to the utilisation of proceeds from the NRL sale shall be communicated to QIPs prior to submission of money bid.”

It also asked the bidders to search for the viewpoint of legal counsel’s on application of anti-monopoly restrictions.

“The productive bidder could will need to file with the Competition Fee of India (CCI) for its acceptance to the acquisition,” it stated. Also, bondholders/ loan companies consent, if expected, will be taken at an ideal stage, it stated.

It was asked if retains of $one.65 billion bonds can not block or pre-empt the sale of federal government stake.

The federal government dominated out altering the requirement of bidder or the consortium of bidder collectively owning a web well worth of $10 billion. “Ask for for reduction of web well worth criteriacannot be approved,” it stated.

It also did not take a proposal of shifting the venue of the arbitration, arising in scenario of dispute in the privatisation process, to a neutral discussion board these kinds of as Singapore.

“Not satisfactory,” DIPAM stated introducing the venue of arbitration is New Delhi, India.

“If a qualified IP (interested social gathering)has submitted its EOI independently of any other and subsequentlywishes to form a consortium for the bid, then the identical is permitted, furnished the consortium is fashioned in 45 days of it being qualified as a QIP,” DIPAM stated.

However, this will only be permitted so lengthy as these kinds of QIP is the lead member of the consortium. Moreover, just about every of the consortium associates ought to be qualified for the bidding.

“Exactly where two sole bidders have qualified centered on the EoIs submitted by just about every of them independently, the formation of a consortium by these sole bidders will not be permitted. Equally, in scenario two consortia have been qualified centered on the EoIs submitted by themindependently, then their consolidation into a single consortium shall not be permitted,” it added.