BPCL yet to decide on stake sale in Petronet, Indraprastha Gas

Bharat Petroleum Corporation Ltd (BPCL) confirmed on Friday that no decision has yet been taken to sell its stake in Petronet LNG and Indraprastha Gas. This stake sale has been proposed in order to help BPCL's new owner avoid making an open offer for the two gas companies.

VRK Gupta, Chief Financial Officer, BPCL, has explained that market regulator SEBI is yet to respond to an application made for exempting BPCL's new owner from making an open offer to minority shareholders of Petronet LNG and Indraprastha Gas, according to a PTI report.

BPCL holds 12.5% stake in Petronet and 22.5% stake in city gas retailer, Indraprastha Gas Ltd (IGL). BPCL is a promoter of both these listed companies and holds board positions in both of them.

According to the Department of Investment and Public Asset Management (DIPAM), the new owner of BPCL will have to make open offers to the minority shareholders of Petronet and IGL for the acquisition of the combined 26% stake. DIPAM is the department that is managing the sale process of the government's entire 52.98% stake in BPCL.

The new owner of BPCL will have to spend an additional Rs 19,100 crore in open offers to minority shareholders of both gas companies where it will get no operational control. In order to avoid this situation, it has been suggested that BPCL should sell a part of its stake in the two gas companies and also drop the promoter status it currently holds.

"There is no decision taken as on date but we are working with the Government of India to protect the interests of BPCL," VRK Gupta said at an investor call. "No decision on this aspect as on date," he added.

BPCL does not want to shed its stake in either IGL or Petronet as the firm sees it as a value destruction proposition. Gupta explained that the company and the government are working with SEBI to see that the requirement of the open offer can be avoided. BPCL has sent a formal application to SEBI requesting exemption from making the open offer.

Gupta added that SEBI has so far not responded. "We are still working with the Government of India to protect the interest of BPCL," he said.

Also Read: Kargil Vijay Diwas: BPCL provides dealerships, distributorships to martyrs' families

Also Read: Union cabinet relaxes foreign investment rules to aid BPCL sale