Expression Of Interest For Air India, BPCL Stake Sale Expected In January: Report

The government is likely to issue Expression of Interest (EoI) for privatisation of Air India and Bharat Petroleum Corporation (BPCL) in January.

"We are working towards issuing EoIs for Air India first and then BPCL in January and should be able to do it. If we are to sell them in March, at least backwards two months are needed for the bidders to do due diligence. Big assets like BPCL will take time as due diligence has to be carried out," a senior Finance Ministry official said here.

BPCL has a market cap of Rs 1.06 lakh crore.

Before the sale, the government is looking to shift more debt from the balance sheet of disinvestment-bound Air India to asset holding company AIAHL to further sweeten the deal for prospective buyers, according to officials.

The government plans to sell 100 per cent stake in the loss-making carrier.

In effort to make the disinvestment more attractive, the carrier has already transferred Rs 29,474 crore of debt to Air India Assets Holding Ltd (AIAHL), a Special Purpose Vehicle.

Civil Aviation Secretary Pradeep Singh Kharola had recently said the government is working on the debt issue of Air India to make it more attractive to buyers.

Air India has a debt of over Rs 58,000 crore. Its net loss in 2018-19 is provisionally estimated to be Rs 8,556.35 crore.

In November, the government kicked off a mega disinvestment plan, lining up the sale of five public sector units (PSUs), including majority stakes in bluechip oil company Bharat Petroleum Corp Ltd (BPCL) and the Shipping Corporation of India. Also on sale will be a 31 per cent stake in Container Corporation of India (Concor) along with management control.

Based on current market prices, the sale of stakes in these three firms will fetch the PM Modi government about Rs 78,400 crore, taking it close to the disinvestment target for the fiscal year.

At current market value, the government can raise about Rs 63,000 crore from selling its entire 53.3 per cent stake in BPCL. The actual realisation from BPCL could be much higher on account of the control premium the government will seek from any strategic investor.

Big international oil companies, including Saudi Aramco, are said to be keen on investing in BPCL, given the refiner's strong presence in fuel retailing, among other things.

The BPCL strategic sale will not include the 61.7 per cent stake that it holds in the Numaligarh Refinery Ltd. This will be offered to a public sector entity in the oil and gas sector.

Earlier at the Assocham centenary year event, Finance Minister Nirmala Sitharaman took the opportunity to ask the industry bid for the PSUs on sale.

"Disinvestment of CPSEs is happening and some of you may have to come forward to participate in them and offer a bid. You can't remain quiet. You look at prospects of growing your businesses by picking up some of these companies which are are being offered. These are essentially good companies and you must be the first bidders," she said.

Soon after the FM's call, Vedanta Chairman Anil Agarwal, who was present at the event, also told media that his company would definitely consider bidding for the PSUs on offer.

"We will evaluate if it makes sense where we can supply our oil, we should look at BPCL or any kind of asset that comes. When the EoI comes, we will definitely look at all assets," he said.

On if Air India would find a bidder this time after failure to find one last time, he said the airline's huge debt is creating the problem. "But it will get some bidders," Mr Agarwal said.

The government has a target of Rs 1.05 lakh crore sale-off target this fiscal. So far, only Rs 17,354 crore has been achieved.