BPCL privatisation hit by ESG concerns, energy transition: DIPAM Secy

The Centre is finding it difficult to convince the shortlisted bidders to submit financial bids for privatisation of state owned oil marketing company, Bharat Petroleum Corporation Limited (BPCL), owing to their concerns on climate change and energy transition.

“A company may be very good. But if an economic activity vanishes due to climate change or any other economic transition, what option does one have. In fact, to some extent our BPCL privatisation is suffering because of that,” says Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey.

“In the beginning oil and later coal were considered precious as gold. The perspective has changed. Now the investors are saying that if you do not have ESG rating, we will not put in the money,” Pandey said.

Sharing an update on the BPCL privatisation, Pandey said, “Qualified bidders are already in. But we are finding it difficult to persuade them to come for financial bidding. ESG and largely the factors related to the energy transition issue are the major constrains.”

Even though the shortlisted bidders have got cold feet, the transaction advisers will persuade the bidders to come back to the bidding process. As of now there is no discussion on reconsidering the bidding process and inviting fresh expression of interests, other sources in the Ministry of Finance pointed out. For the BPCL privatisation bidding, out of the total five to six bidders who submitted the expression of interest, only one is actively in the fray as of now.

Sale of 52.98% stake in the state-owned oil marketing firm was announced by finance minister Nirmala Sitharaman in 2019. The deadline to submit the expression of interest was deferred a couple of times due to the onset of the Covid-19 pandemic in 2020.

Anil Agarwal’s Vedanta has emerged as the front runner in the BPCL privatisation process. The company has said that it will tie up with more investors for the process of the BPCL bid. It plans to jointly set up a specific fund bid for the public sector oil marketing mammoth.