Future-ready: BPCL plans Rs 1-lakh-crore investment in 5 years

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September 28, 2021 4:41 AM

Chairman Arun Kumar Singh told reporters on Monday after the annual general meeting that the company was looking to create a 1,000 MW portfolio of renewable power generation capacity, mostly through acquisitions while it would also invest in bio-fuels and hydrogen.

Privatisation-bound Bharat Petroleum (BPCL)The break-up of the investment plan includes: petrochemical capacity and improving refining efficiencies (Rs 30,000 crore) and gas proliferation (Rs 20,000 crore). Other investments would be in upstream oil and gas exploration and production (Rs 18,000 crore) and augmenting fuel marketing infra (Rs 18,000 crore). Besides, the firm will also invest Rs 5,000 crore in renewable energy and another Rs 7,000 crore in biofuels.

Privatisation-bound Bharat Petroleum (BPCL) has drawn up plans to invest over Rs 1 lakh crore in the next five years, as the country’s second-largest fuel retailer shifts focus towards petrochemicals, renewables, electric mobility and other alternative fuels. Chairman Arun Kumar Singh told reporters on Monday after the annual general meeting that the company was looking to create a 1,000 MW portfolio of renewable power generation capacity, mostly through acquisitions while it would also invest in bio-fuels and hydrogen.

The break-up of the investment plan includes: petrochemical capacity and improving refining efficiencies (Rs 30,000 crore) and gas proliferation (Rs 20,000 crore).

Other investments would be in upstream oil and gas exploration and production (Rs 18,000 crore) and augmenting fuel marketing infra (Rs 18,000 crore). Besides, the firm will also invest Rs 5,000 crore in renewable energy and another Rs 7,000 crore in biofuels.

The idea is to develop a judicious mix of conventional fuels and zero-carbon-mobility, in what would allow a greater degree of feasibility in converting crude oil directly into high-value petrochemicals. “We are presently evaluating various propylene and ethylene derivatives, both in the bulk as well as niche segments,” Kumar said.

The planned investments would be funded through internal accruals and debt. The refiner generates around $1 billion in cash every year, out of which 50%-60% goes towards dividend payouts. “We will reduce the dividend payout to generate cash,” VR Gupta, director finance at BPCL said.

Asked whether the company was planning to recalibrate its refineries to compensate for the drop in diesel demand and increase in demand for gasoline, Kumar said, “If the push to electric vehicles is accelerated beyond what we have factored in and the economy does not grow beyond 7-8%, diesel can have serious issues.” “However, petrochemicals will continue to grow and lot of middle distillates will find way to petrochemicals. Our refineries can be recalibrated to meet the increased gasoline demand while diesel demand is subdued,” he added.

In September 2021, petrol demand in the country was 7-8% more than a year ago, but demand for diesel was still 6-7% below the year-ago level, Kumar noted. The company also plans to spend Rs 18,000 crore in upstream exploration business where Rs 16,000 crore will go towards Mozambique gas exploration site. BPCL expects to resume work shortly at the site after the security related issues are resolved. The operator had withdrawn all personnel due to security issues in March 2021

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