Privatisation-bound Bharat Petroleum Corporation Ltd (BPCL) on Monday said it will exit Numaligarh refinery in Assam by selling its entire stake to a consortium of Oil India Ltd and Engineers India Ltd for Rs 9,876 crore. The sale of Numaligarh Refinery Ltd clears the way for privatisation of India's second-largest fuel retailer.
In keeping with the Assam Peace Accord, the government had decided to keep Numaligarh Refinery Ltd (NRL) in the public sector. As part of this, BPCL was to sell its entire 61.65 per cent stake to state-owned firms. A consortium of Oil India Ltd, Engineers India Ltd, and the Government of Assam expressed interest in buying the stake and the BPCL board on Monday approved the sale.
"The board of directors of BPCL at the meeting held on March 1, 2021, has approved the proposal for sale of entire equity shares of 445.35 crore held by BPCL in NRL to a consortium of OIL and EIL and to Government of Assam," the firm said in a filing to the stock exchanges.
Total consideration would be Rs 9,875.96 crore. The consortium of OIL and Engineers India Ltd is likely to acquire 49 per cent and the rest 13.65 per cent will be sold to the Government of Assam. NRL operates a 3 million tonnes per annum oil refinery in Assam. OIL currently holds 26 per cent equity in NRL while the Government of Assam has around 12.35 per cent.
Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey in a tweet said, "privatisation process of BPCL moves ahead with BPCL Board deciding to exit from NRL at a consideration of Rs 9,875.96 cr for its 61.65% stake with transfer of control. OIL, EIL and Government of Assam will be picking up the stake".
Privatisation process of BPCL moves ahead with BPCL Board deciding to exit from NRL at a consideration of Rs 9875.96 Cr for its 61.65% stake with transfer of control. OIL, EIL and Government of Assam will be picking up the stake. pic.twitter.com/X0vqzzuMSnSecretary, DIPAM (@SecyDIPAM) March 1, 2021
Post NRL sale, BPCL would be left with three refineries at Mumbai, Kochi (Kerala) and Bina (Madhya Pradesh). 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's 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.
In the run-up to the privatisation, BPCL last month agreed to buyout Oman Oil Company's shares in the Bina refinery project for about Rs 2,400 crore. 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. It will buy 36.62 per cent of the equity share capital from OQ S.A.0.C. (formerly known as Oman Oil Company S.A.0.C.) for Rs 2,399.26 crore.
BORL was incorporated in February 1994 to build a refinery at Bina. The unit initially could turn 6 million tonnes of crude oil annually into fuel, which was subsequently raised to 7.8 million tonnes.
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