Bharat Petroleum divestment process begins amid coronavirus lockdown

Despite the Covid-19 lockdown, the central government is keeping the ball rolling for divestment of its stake in Bharat Petroleum Corporation (BPCL). The Assam government has given a no-objection certificate (NOC) for the sale of 61.65 per cent BPCL stake in Numaligarh Refinery (NRL).

The sale of NRL to a state-run entity is seen as a first step towards the divestment process of BPCL. The state has given the NOC to the deal on the condition that another 13.65 per cent stake in NRL will be sold to Assam, increasing its total stake in the project from 12.35 to 26 per cent.

This sale will precede the divestment of BPCL, which is expected to happen only after October 2021, owing to the lockdown, and the decline in valuations. From a three-month high of Rs 501.65 a share on February 5, BPCL shares dropped by 27 per cent to Rs 368.3 apiece on Monday.

According to a report by ICICI Securities, the drop in share price is due to weakening gross refinery margin, correction in stock markets, and concern that the oil price drop will adversely impact private sector interest in the company. Based on current market cap, the government stake in BPCL is valued at around Rs 42,750 crore.

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