Oil India, Engineers India led consortium to buy 48% stake in NRL

MUMBAI : An Oil India Ltd and Engineers India Ltd-led consortium will buy 48% stake in the Bharat Petroleum Corporation Ltd’s subsidiary, Numaligarh Refinery Ltd (NRL).State-run refiner Bharat Petroleum Corporation Ltd (BPCL) holds 61.65% stake in NRL, while Oil India holds 26% and the government of Assam owns 12.35%.

The consortium may have to shell out over ₹5,500 crore to buy the stake.As part of its strategy to divest stake in BPCL, the government last November decided to carve out NRL from BPCL. Oil India’s board however is yet to decide on how much the company would be investing in NRL.

“Principal decision has been taken by the government, that Oil India Ltd and Engineers India Ltd. consortium will be acquiring 48% of the BPCL stake,” Harish Madhav, Director Finance, Oil India told analysts post the company’s annual results.

Madhav added that the company has already submitted its expression of interest but NRL’s stake sale is purely linked with that of the government’s stake sale in BPCL.”So both processes will happen simultaneously almost,” he said,

The government has invited initial bids to sell its entire 52.98% stake in BPCL. The refiner has a market capitalisation of around ₹85,316 crore and government stake would be valued around ₹45,200 crore. The successful bidder for BPCL will also have to make an open offer to other shareholders for acquiring another 26% stake.

Many marquee investors and companies including Saudi Aramco, Rosneft, Kuwait Petroleum, Total SA and Abu Dhabi National Oil Co.are said to have expressed interest in participating in BPCL’s divestment.

However, in view of the covid-19 pandemic, the government has already extended twice the deadline to submit expressions of interest for BPCL’s stake sale. The last date for submitting expressions of interest is now 31 July.

Privatisation of BPCL is key to meeting government’s ₹2.1 lakh crore target that it has set for itself from disinvestment proceeds in the budget for 2020-21.Oil Minister Dharmendra Pradhan on 28 June had said that there is no going back on the decision to privatise the country’s largest oil marketing company BPCL in view of the slump in global energy prices.

“My colleague Finance Minister Nirmala Sitharaman and DIPAM is looking into that (timing of the sale). They will take an appropriate decision looking at the market scenario. But the primary decision of disinvestment of BPCL stands,” he said.

BPCL operates four refineries in the country—Mumbai (Maharashtra), Bina (Madhya Pradesh), Kochi (Kerala) and Numaligarh (Assam). It has a combined refining capacity of 38.3 million tonnes per annum (mmtpa), which is 15.3% of India’s total refining capacity of 249.8 million.

NRL was set up at Numaligarh in Assam’s Golaghat district, in accordance with provisions of the Assam Accord signed on 15 August 1985, and has been associated with the industrial and the economic development of the region.

The capacity of NRL is being expanded from the present 3 million metric tonnes per annum (MMTPA) to 9 MMTPA at an investment of ₹22,594 crore.The expansion project is targeted to be completed in four years and expected to meet the refining requirements of the North-East region.

The expansion involves laying down a crude oil pipeline from Paradip in Odisha to Numaligarh and a product pipeline from Numaligarh to Siliguri. NRL enjoys the status of a Mini Ratna public sector unit.

NRL in a bid to diversify, has entered the upstream business of exploration and production and is in the process of acquiring a 20% stake in Namrup Block from Oil India.