Financial bids are yet to be invited.
The official said the transition towards green and renewable fuel has made privatisation difficult in existing terms.
“The total stake that may be offered to potential buyers too needs a rethinking in current conditions and easing of terms to help investors in forming a consortium,” the official said.
An email sent to the Finance Ministry seeking comments on the story did not elicit a response.
At the current market price, the 52.98 per cent stake is valued at about Rs 45,000 crore.
The government invited Expression of Interest from bidders in March 2020 for selling BPCL and by November 2020 at least 3 bids had come in.
The three bidders — Vedanta, private equity firms Apollo Global and I Squared Capital’s arm Think Gas — were thereafter allowed physical inspection of assets such as refineries and depots as part of the due diligence process.
The government was to seek financial bids once bidders completed due diligence and the terms and conditions of the share purchase agreement were finalised.
The government has pegged disinvestment receipts at Rs 65,000 crore in the current fiscal, up from Rs 13,531 crore mopped up last fiscal.