Once the approval is granted, an EoI seeking interest from potential buyers will be floated, they said, adding the EoI along with PIM was likely to be out in the market within this month.
The government plans to sell its entire 53.29 per cent stake in BPCL that will give buyers ready access to 14 per cent of India's oil refining capacity and about one-fifth of the fuel market share in the world's fastest-growing energy market.
Sources said a two-stage bidding process will be followed wherein request for proposal or RFP in the first stage will be followed by due diligence-cum-bidding by qualified bidders in the second phase.
BPCL has a market capitalisation of about Rs 1.03 lakh crore and the government stake at current prices is worth about Rs 54,000 crore. The successful bidder will also have to make an open offer to other shareholders for acquiring another 26 per cent at the same price.
Privatisation of BPCL is essential for meeting the record Rs 2.1 lakh crore target Finance Minister Nirmala Sitharaman has set from disinvestment proceeds in the Budget for 2020-21.
BPCL operates four refineries in Mumbai (Maharashtra), Kochi (Kerala), Bina (Madhya Pradesh) and Numaligarh (Assam) with a combined capacity of 38.3 million tonnes per annum, which is 15 per cent of India's total refining capacity of 249.4 million tonnes. While the Numaligarh refinery will be carved out of BPCL and sold to a PSU, the new buyer of the company will get 35.3 million tonnes of refining capacity.
It also owns 15,177 petrol pumps and 6,011 LPG distributor agencies in the country. Besides, it has 51 LPG (liquefied petroleum gas) bottling plants.
The company distributes 21 per cent of petroleum products consumed in the country by volume as of March this year and has more than a fifth of the 250 aviation fuel stations in the country.
Sources said the disinvestment process being followed for privatisation of Central Public Sector Enterprises (CPSEs) is based on decision-making through inter-ministerial consultations and involvement of professionals and experts.
After in-principle consent by the administrative ministry of the state-owned company concerned, approval of the proposal to disinvest is taken from the Cabinet Committee on Economic Affairs (CCEA).
CCEA approved BPCL stake sale in November last year. Following this, an inter-ministerial group (IMG) was constituted. IMG appointed advisers for the transaction, including merchant bankers, asset valuers and legal advisers.
The 'Alternative Mechanism' approves reserve or base price as well as price bids. Sources said BPCL privatisation process may take six to eight months to complete.