Fitch ratings, a leading provider of credit ratings has said in a statement that as progress in Bharat Petroleum Corporation Limited (BPCL) privatisation is up, but there is still little information on potential restrictions for the new owner in regarding employee protection, asset stripping, and investment lock-in.
Further, there is also a need for clarity on the 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, Fitch said in a statement.
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.
BPCL has finalised 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. 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, it added.
However, BPCL has declared an interim dividend of Rs 1,100 crore on 16th March 2021.