BPCL Board approves disinvestment of 61.65% stake in NRL for Rs 9,875 cr

• BPCL expects to complete the sale within a month after obtaining all requisite approvals

• The disinvestment of NRL is a key step towards the privatisation of BPCL

New Delhi: The Board of Directors of disinvestment-bound Bharat Petroleum Corporation Ltd (BPCL) has approved the sale of its entire shareholding of 61.65 percent in Numaligarh Refinery Ltd (NRL) for Rs 9,875 crore on Monday, the company said in a regulatory filing to the stock exchanges on Monday. The Share Purchase Agreement will be entered into after obtaining approval from the shareholders and BPCL expects to complete the sale within a month after obtaining all requisite approvals, said the state-run oil marketing company.

"…we wish to inform you that the Board of Directors of Bharat Petroleum Corporation Limited ("BPCL") at the meeting held on 1.3.2021 has approved the proposal for sale of entire equity shares i.e. 45,35,45,998 equity shares of Rs 10/- each held by BPCL in Numaligarh Refinery Ltd (NRL) (constituting 61.65% of the total equity capital of NRL), a material subsidiary company of BPCL to a consortium of Oil India Limited and Engineers India Limited, ("consortium"); and to Govt. of Assam, or only to the said consortium in case Govt. of Assam does not participate in purchase of said shares, in such proportion and on such terms and conditions as approved by the Board," BPCL told the stock exchanges. 

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The news comes weeks after BPCL Director (Finance) N Vijayagopal said that a formal announcement with regards to the sale of BPCL's stake in NRL will be made soon. He had also said that the consortium of OIL and Engineers India Ltd will acquire 49 percent and the rest 13.65 percent will be sold to the government of Assam.

BPCL privatisation process moves ahead: DIPAM Secretary

Sharing the news on Twitter, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said, "Privatisation process of BPCL moves ahead with BPCL Board deciding to exit from NRL at a consideration of Rs 9875.96 Cr for its 61.65% stake with transfer of control. OIL, EIL and Government of Assam will be picking up the stake."

The disinvestment of NRL is a key step towards the privatisation of BPCL. The DIPAM Secretary has said that the government is hopeful about completing the privatisation of BPCL by H1 of FY22. The sale of the government's 52.98 percent stake in BPCL is one of the largest PSU disinvestments undertaken by the government in India. It is being keenly watched by industry experts because it will give the strategic investor a large chunk of share in the fuel retail market in the world's third-largest energy market. The sale is also crucial to the government hitting the disinvestment target of Rs 1.75 lakh crore in FY22. 

NRL

NRL has undertaken a refinery expansion project under which it is expanding its refining capacity from 3 MTPA to 9 MTPA at an investment of Rs 22,594 crore. The expansion is expected to be completed by 2024. The state-run company is also setting up crude oil pipeline from Paradip in Odisha to Numaligarh and a product pipeline from Numaligarh to Siliguri in West Bengal under the same project. The consolidated total income of NRL for the financial year ended March 31, 2020 was Rs 14,244.29 crore, ie 4.29 percent of the consolidated total income of BPCL for the financial year March 31, 2020.

The consolidated net worth of Numaligarh Refinery Limited as of March 31, 2020 was Rs 5,292.00 crore, ie 14.18 percent of the consolidated net worth of BPCL, as on March 31, 2020. 

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