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 the privatisation of India’s second-largest fuel retailer.
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. Bharat Petroleum Corporation (BPCL) has decided to sell its entire 61.65% stake in Numaligarh Refinery (NRL) for nearly ₹9,876 crores to a consortium of Oil India (OIL) and Engineers India (EIL) and the Assam government.
In the event of the State government, which holds a 12.35% stake in NRL and has the right of the first offer, deciding against acquiring the shares being offloaded, the consortium of the two companies will be the buyer. The share purchase agreement, with the buyers, will be entered into after BPCL shareholders approve the stake sale. The transaction is expected to be completed within a month of obtaining all requisite approvals, BPCL informed the stock exchange on Monday. The development assumes significance as the Centre had decided to delink NRL ahead of the proposed divestment of BPCL. The consolidated total income of NRL in 2019-20 was ₹14,244.29 crore or 4.29% of the consolidated total income of BPCL. The consolidated net worth of NRL as of March 31, 2020, was ₹5,292 crore, which is 14.18% of the consolidated net worth of BPCL.
Last month, OIL and EIL had announced the decision to bid as a consortium for the 61.65% stake. The exact percentage of the stake of OIL and ElL will depend on the extent of the right of first offer (ROFO) to be exercised by the Assam government, they had said.
“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 crores 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% and the rest 13.65% will be sold to the Government of Assam. NRL operates 3 million tonnes per annum oil refinery in Assam. OIL currently holds 26% equity in NRL while the Government of Assam has around 12.35%.
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 the transfer of control. OIL, EIL and Government of Assam will be picking up the stake”.
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% stake in BPCL in the nation’s biggest privatisation to date. Vedanta Group and private equity firms Apollo Global and I Squared Capital’s Indian unit Think Gas has 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% 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.
