Bharat Petroleum Corporation Limited (BPCL), India’s second largest state-owned oil marketer is mulling a merger with GAIL (India), India’s largest gas distributor, and Oil India, the country’s second largest explorer, to create an integrated energy giant after the Centre approved the merger of rival Hindustan Petroleum Corp. Ltd. (HPCL) with ONGC.
BPCL, which got Maharatna status on Tuesday, has written to the petroleum ministry about its ambitious plan and is waiting to hear back from the government.
Global ambition
Confirming the development, BPCL Chairman D. Rajkumar said, “BPCL has also got aspirations and ambitions to get into some kind of integration. This integration will be planned in such a manner that will fulfil our ambition to be among the top 25 energy companies in the world. There are a number of options being evaluated but it’s very difficult for me to share with you as it needs to be approved by the government as we are going to buy the stakes from the government.”
Finance Minister Arun Jaitley had set the ball rolling on the merger of state owned oil firms in his 2017 budget speech when he seplt out the government’s intent to create integrated public sector ‘oil majors’ to match the performance of global oil firms and domestic private sector firms.
“GAIL India and Oil India are there on the radar,” Mr. Rakjumar said, when asked about the companies BPCL was looking to merge with. “We have submitted our proposal to the government but it’s going to take some time as we have to see how the ONGC and HPCL integration goes and ours will be after that.”
Petrochem plans
BPCL plans to invest ₹1.08 lakh crore over the next five years, of which ₹45,000 is aimed at investments in petrochemicals alone to get better margins.
BPCL posted revenue of ₹2.42 lakh crore and a profit of ₹8,000 crore in FY17. GAIL (India) had revenue of ₹48,883 crore and profit of ₹3,503 crore, while Oil India had revenue of ₹9,510 crore and profit of ₹1,548 crore in the last financial year. Based on these figures, a combined entity would potentially have revenue of about ₹3 lakh crore with profits in the vicinity of ₹13,000 crore.
While BPCL’s market capitalisation was ₹1,08,538 crore, GAIL and Oil India had market capitalisation of ₹34,456 crore and ₹24,483 crore respectively.
BPCL shares slid 6% to close at ₹500.35 on the BSE on Wednesday.
ONGC — with revenue of ₹77,908 crore and profit of ₹17,890 crore in the last financial year — would, post its merger with HPCL, end up as an entity with revenue of about ₹2.9 lakh crore.
