BPCL’s Oman Oil stake buy in Bina refinery in 10 days; NRL stake sale by March 31

By: |
February 9, 2021 5:42 PM

"Discussions (to acquire 36.62 per cent stake of OQ S.A.O.C) have concluded. We can come out with an announcement of the acquisition of the stake in next 10 days or so," BPCL Director (Finance) N Vijayagopal told reporters on an earnings call.

However, lower demand has led to a drop in throughput on a year-on-year basis.However, lower demand has led to a drop in throughput on a year-on-year basis.

Privatisation-bound Bharat Petroleum Corporation Ltd (BPCL) will buy out Oman Oil Company’s shares in Bina refinery project in the next 10 days, and is hoping to complete a separate sale of its stake in Numaligarh Refinery by the next month-end, its director-finance said on Tuesday.

BPCL holds a 63.68 per cent stake in Bharat Oman Refineries Ltd (BORL), which built and operates a 7.8 million tonne oil refinery at Bina in Madhya Pradesh.

“Discussions (to acquire 36.62 per cent stake of OQ S.A.O.C) have concluded. We can come out with an announcement of the acquisition of the stake in next 10 days or so,” BPCL Director (Finance) N Vijayagopal told reporters on an earnings call.

OQ S.A.O.C. was formerly known as Oman Oil Company. Without giving details, he said the deal details such as acquisition price will form part of the announcement likely in the next 10 days.

BORL was incorporated in February 1994 to build a refinery at Bina in Madhya Pradesh. The unit initially could turn 6 million tonnes of crude oil annually into fuel, which was subsequently raised to 7.8 million tonnes.

Before the company is privatised, BPCL will exit Numaligarh Refinery Ltd (NRL) by selling its 61.65 per cent stake to a consortium of Oil India Ltd and Engineers India Ltd, Vijayagopal said. It is selling stake because the government had as per the Assam Peace Accord, agreed to keep NRL in the public sector.

“The consortium of OIL and Engineers India Ltd will acquire 49 per cent and the rest 13.65 per cent will be sold to the government of Assam,” he said, adding the company board at its meeting on Monday approved the share purchase agreement.

OIL currently holds 26 per cent equity in NRL, while the government of Assam has around 12.35 per cent.
The value for 61.65 per cent stake in NRL is reportedly around Rs 7,000 crore.

“NRL stake sale is happening at a rapid pace,” he said. “Valuation is being done by valuers and if things go as planned, the transaction will be completed by March 31.”

The completion of the transaction is subject to the deal getting requisite government approvals, he noted.Post NRL sale, BPCL would be left with three refineries at Mumbai, Kochi in Kerala and Bina.

The government is selling its entire 52.98 per cent stake in BPCL in the nation’s biggest privatisation till date.
Vedanta Group and private equity firms Apollo Global and I Squared Capital’s Indian unit Think Gas have put in an expression of interest for buying the government stake.

The sale of NRL is the first step towards the disinvestment of BPCL. The government has already indicated that it expects to complete BPCL privatisation by the first half of the fiscal beginning April (2021-22).

The sale is key to achieving the Rs 1.75 lakh crore disinvestment target set for 2021-22. BPCL will give the buyer ownership of around 15.33 per cent of India’s oil refining capacity and 22 per cent of the fuel marketing share.

NRL is looking to expand its refining capacity from 3 million tonnes per annum to 9 million tonnes a year at an investment of Rs 22,594 crore. The project is expected to be completed by 2024.

The expansion also involves setting up of crude oil pipeline from Paradip in Odisha to Numaligarh and a product pipeline from Numaligarh to Siliguri in West Bengal.

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