BPCL already owns the majority 63.4% stake in BORL. Sector experts believe the acquisition of the remaining stake will smoothen the divestment process of the government's 52.98% stake in the oil marketing firm.
The BPCLstock closed at Rs 398.7 on the BSE on Tuesday, falling 1.74% over Monday's closing.
Clearing the decks for the privatisation process, state-run oil refiner and marketer BPCL on Tuesday said the company’s board would on Wednesday take a call on buying a 36.6% equity share in Bharat Oman Refineries (BORL) — the unit that runs the 7.8 million tonne Bina refinery — from OQ S.A.O.C (formerly known as Oman Oil Company). BPCL already owns the majority 63.4% stake in BORL. Sector experts believe the acquisition of the remaining stake will smoothen the divestment process of the government’s 52.98% stake in the oil marketing firm.
BPCL added the board will also deliberate on the merger of Bharat Gas Resources, currently its wholly-owned subsidiary, with the holding company. Bharat Gas was formed in 2019 for better focus on gas business in 37 geographical areas across the country.
The BPCLstock closed at Rs 398.7 on the BSE on Tuesday, falling 1.74% over Monday’s closing. “The government is preparing to divest a stake in BPCL and many recent actions appear to be in the direction of making the divestment successful,” Deepak Mahurkar, partner, PwC, told FE.
BPCL owns and operates four refineries (Mumbai, Kochi, Bina and Numaligarh) in India, comprising 15% of the country’s 250 million tonne refining capacity; it also has over a quarter of the retail market share through a 17,000-plus strong retail fuel outlet network in the country. Its privatisation is seen as critical for the government to boost its non-debt capital receipts this fiscal, when all revenue streams are faltering due to deep economic slump caused by Covid. BORL was established in 1994 as a joint venture between BPCL and Oman Oil Company, and in FY20, BPCL increased its stake in the entity from 50% to 63.4%.
BPCL’s stake in Numaligarh refinery will be sold to another CPSE oil firm separately, the government had clarified earlier. The sale of government’s stake in BPCL is likely to be single largest component of the Centre’s disinvestment receipts this fiscal, which is likely to be far below the ambitious Rs 2.1 lakh crore budgeted. Eight-and-a-half months into the fiscal, the Centre is now making a determined effort to sell its stake in BPCL, which was worth Rs 45,787 crore at Tuesday’s closing price on the BSE.
While Vedanta, the India arm of Anil Agarwal-controlled, London-headquartered Vedanta group, has said it formally evinced interest in buying BPCL, private equity firms Apollo Global and I Squared Capital’s arm Think Gas have also thrown their hats in the ring. The government’s stake in BPCL was worth about Rs 60,000 crore in November 2019, around the time the stake sale proposal was approved by the Union Cabinet. However, the actual receipts will depend on valuation and consideration of a premium (ONGC had bought the Centre’s stake in HPCL in FY18 at a premium of 14% to the stock’s price).