The privatized Bharat Petroleum Corporation Limited (BPCL) on Friday said it has sold its entire 61.5 per cent stake in Numaligarh Refinery in Assam to Oil India Limited and Engineers India and the Government of Assam for Rs 9876 crore. The company said that OIL bought a 54.16 percent stake in the refinery to increase its stake to 80.16 percent.
Its partner, Engineers India Limited (EIL), bought a 4.4 percent stake and the remaining 3.2 percent was acquired by the Assam government. The sale of Numaligarh Refinery Limited (NRL) has paved the way for the privatization of India’s second largest fuel retailer.
In keeping with the Assam Peace Accord, the government had decided to place the NRL in the public sector. As part of this, BPCL was to sell its entire 61.65 percent stake to state-owned firms. A consortium of OIL, EIL and Assam Government expressed interest in purchasing the stake.
BPL contemplated Rs 9,375.96 crore for sale of Rs 43.05 crore in the NRL on 25 March 2021 between the consortium of BCLL and EIL. The remaining 2.29 crore equity shares have been transferred to the Government of Assam for Rs 499.99 crore.
The firm said in a separate filing, “The pre-acquisition equity shareholding in NRL (including pre-acquisition 26% shareholding) in these NRLs is 80.16%”. EIL said it paid Rs 699.99 crore for 3.21 crore shares in NRL while OIL bought 39.84 crore shares for Rs 8,675.96 crore.
“OIL, the Chairman and Managing Director, who is currently the designated Director of OIL on the Board of the Target Company (NRL), will be nominated as Chairman.” The existing directors nominated by BPCL on the board of NPCL will resign and the authority of BPCL to appoint a director shall cease.
BPCL sold shares in NRL at Rs 217.75 per share, taking the total to Rs 9,875.96 crore. NRL operates a 3 million tonne oil refinery in Assam per year.
OIL currently holds a 26 percent stake in the NRL while the Assam government holds around 12.35 percent. NRL sales, BPCL will be left with three refineries at Mumbai, Kochi (Kerala) and Bina (Madhya Pradesh).
The government is selling its entire 52.98 percent stake in BPCL, the country’s largest privatization. The Indian unit of Vedanta Group and private equity firms Apollo Global and I Square Capital, Think Gas, have expressed interest in 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 privatization by the first half of the financial year starting from April (2021-22).
This sale is critical to achieve the disinvestment target of Rs 1.75 lakh crore set for 2021-22. BPCL will give the buyer ownership of about 15.33 per cent of India’s oil refining capacity and 22 per cent of the fuel marketing share.
NRL plans to increase its refining capacity from 3 million tonnes per year to 9 million tonnes at an investment of Rs 22,594 crore. The project is expected to be completed by 2024. This expansion includes the installation of a crude oil pipeline from Paradip to Numaligarh in Odisha and a product pipeline from Numaligarh to Siliguri in West Bengal.
For privatization, BPCL last month agreed to buy Oman oil company’s shares in the Bina refinery project for about Rs 2,400 crore. BPCL has a 63.68 percent stake in Bharat Oman Refineries Limited (BORL), which has built and operates a 7.8 million tonne oil refinery in Bina. It will buy 36.62 percent equity share capital from OQ SA0.C. (Formerly known as Oman Oil Company SA0.C) 2,399.26 Crore Rs.
BORL was incorporated in February 1994 to build a refinery in Bina. The unit could initially convert 6 million tonnes of crude oil annually into fuel, which was later raised to 7.8 million tonnes.