State-run Bharat Petroleum Corporation Ltd may acquire its partner Oman Oil Company Ltd’s stake in Bharat Oman Refineries Ltd (BORL), a joint venture between the companies, said two officials from BORL.
“We will acquire Oman Oil’s stake if they are willing to offer. So far there has been on such communication from Oman Oil,” said N Vijayagopal, director finance, BPCL.
BPCL had this June increased its stake in the refinery from 50% to 63%, after converting warrants into shares. BORL thus became a subsidiary of BPCL.
BPCL had made an investment in compulsorily convertible debentures and share warrants of BORL or Bina refinery in Madhya Pradesh. This was equivalent to 24% additional equity stake in BORL. Part of these share warrants, 13%, have been converted to equity. A decision on conversion of the remaining 11% warrants would be taken at a later stage, the company said.
“At the most diluted stage, Oman Oil will be holding 20%-odd stake in the fully diluted capital stake of BORL. So our stake will increase to around 79% with a minor stake being held by the Government of Madhya Pradesh,” added Vijayagopal.
In 2015, Oman Oil Co. had expressed its reluctance to put more money in the refinery to fund its ₹3,000 crore expansion. BPCL, in April 2016, sought government approval to put in more equity to fund the expansion by way of subscription of convertible warrants, giving it the right to convert it into equity shares.
Till 2018-19, in addition to Oman Oil, national oil companies of Kuwait and Abu Dhabi were also in talks with BPCL to buy up to 24% stake in the refinery. But with crude oil prices crashing, talks did not progress.
BORL is a key refinery for BPCL, helping the company serve the northern and central markets in the country. The refinery receives crude supply by a cross-country pipeline from Vadinar to Bina.
Bina refinery has raised its refining capacity in two phases— to 7.8 million tones million tonners per annum (mtpa) from the initial 6 mtpa at a cost of ₹3,072 crore and then to 15 mtpa for an additional investment of ₹30,000 crore in the next four-five years. The refinery will also set up a petrochemical unit with a 1.5 mtpa naphtha cracker.
“Bina is a well-performing refinery posting handsome gross refining margins. Despite the process of privatisation, we are going ahead with Bina’s expansion plans,” added Vijayagopal.
BPCL has cut its capital expenditure for this fiscal by 36% from ₹12500 crore to ₹8000 crore.
It has decided that any project which has an investment of less than ₹150 crore is minor project and will be put on hold.