With no boss around, is BPCL going driverless on stake sale drive?

Two of the top executives in the board are set to superannuate from the services of the corporation on August 31

As state-run Bharat Petroleum Corporation Ltd (BPCL) inches close to disinvestment, the company seems to be staring at the problem of vacant board positions. Posts as important as those of chairman and managing director and refinery director are falling vacant by August-end.

Two of the top executives in the board — including chairman and managing director D Rajkumar and director (refineries) R Ramachandran — are set to superannuate from the services of the corporation on August 31. Interestingly, the Public Enterprises Selection Board (PESB) came out with job notifications for filling both the posts in August 2019. However, this headhunting process was cancelled early this year as the company was initially expected to go for divestment in the fourth quarter of 2019-20 or the first quarter of 2020-21.

With Covid-19 and the subsequent lockdown delaying the divestment process, the company is likely to land in a spot now with a million-dollar question on whether the company will go headless amid its quest for private investors. Government sources indicated that thoughts are already there on giving an extension to the two executives as the company is going through a crucial period. A petroleum ministry spokesperson did not respond to questions from Business Standard.

If not giving an extension, the government may even consider appointing an interim chairman, like in the case of Air India in 2017, when Rajiv Bansal was appointed for the first time as the head of national carrier for three months, when Ashwani Lohani took charge of the Indian Railways. There was precedence of giving such extensions to company heads during crucial juncture. In 2016, when SBI was going through the process of merging five associate banks and Bharatiya Mahila Bank into itself, the then chairman Arundhati Bhattacharya had got an extension for around a year.

At the end of July, the government had extended the deadline for bid submission for sale of 52.98 per cent stake in the country's second-biggest oil refiner, for the third time in a row to September 30. This was following requests from prospective bidders and Covid-19 situation. The company has also offered a voluntary retirement scheme for its employees, who are keen to part ways before the company's privatisation.

Based on the current market cap, the value of the government’s stake in BPCL comes to around Rs 46,694 crore. For investors, around 35.3 MT refining capacity, 16,492 retail outlets, and 72 million LPG customers will be on offer. The cabinet had approved the sale of government's entire 52.98 per cent stake in BPCL in November last year. Offers seeking expression of interest (EoI), or bids showing interest in buying its stake, were invited only on March 7. Initially, the EoI submission deadline was May 2, but on March 31 it was extended up to June 13 and then to July 31, before it got finally extended to September 30.

According to the notice inviting offer, the government's plan is to sell its entire shareholding in BPCL comprising of 114.91 crore equity shares, with the transfer of management control to a strategic buyer, excluding the company's 61.65 per cent in Numaligarh Refinery in Assam. The company's stakes in Numaligarh refinery are expected to be sold to another public sector undertaking. So far, a consortium of state-run Oil India (OIL) and Engineers India (EIL) has shown interest in taking up BPCL's 48 per cent stake in Numaligarh. The remaining stake would be sold to the government of Assam, to increase the state's share to 26 per cent in the venture.