Industry

IOC, OIL in race for Bharat Petroleum’s Numaligarh unit

The Numaligarh refinery in Assam. (pubd. in BUSINESS LINE on July 26, 1999) PHOTO: THE HINDU ARCHIVES

The Numaligarh refinery in Assam. (pubd. in BUSINESS LINE on July 26, 1999) PHOTO: THE HINDU ARCHIVES  

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Oil India already holds 26% stake in the refinery

Indian Oil Corporation Ltd. (IOCL) and Oil India Limited (OIL) are in the race to buy Bharat Petroleum Corporation Limited’s (BPCL’s) 61.65% stake in Numaligarh Refinery Limited (NRL), according to sources in the know of the development.

The strategic sale of the government’s 53.39% stake in BPCL would be done without NRL, Finance Minister Nirmala Sitharaman had said last month. Hence, the government has to first demerge NRL from BPCL.

NRL owns and operates a 3-million-tonne per annum (MTPA) refinery in Numaligarh in Golaghat district of Assam and has plans for a threefold growth in its refining capacity to 9 MTPA at an investment of ₹22,500 crore to meet the rising fuel demand in the North East.

According to Moody’s Investors Service, the sale will reduce BPCL’s capital spending as it is one of the largest projects that the firm is working on. “The valuation of the stake and the use of proceeds from such sale is yet to be determined,” it said.

“We will definitely look at (NRL),” an IOCL board member said, without elaborating. BPCL holds 61.65% stake in the NRL while OIL and Assam Government hold 26% and 12.35%, respectively.

Eyeing synergies

For upstream OIL, NRL will be an opportunity to become an integrated energy company. Acquiring BPCL’s 61.65% stake will increase OIL’s stake in NRL to 87.25%.

A senior OIL official told The Hindu, “Given an opportunity, we would like to buy BPCL’s stake in NRL as we already have 26% stake there. We both have a lot of synergies.” NRL recently acquired a participating interest in two oil blocks in Assam from OIL, marking NRL’s presence across all sectors — upstream, midstream and downstream.

NRL had reported its highest-ever revenue of ₹18,511 crore for FY19 and has a net worth of ₹5,551 crore.

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Printable version | Jan 21, 2020 10:14:12 PM | https://www.thehindu.com/business/Industry/ioc-oil-in-race-for-bharat-petroleums-numaligarh-unit/article30289715.ece

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