Exclusive | BPCL may buy Oman oil company OQ's stake in Bina refinery for Rs 2,000 crore

Divestment-bound Bharat Petroleum Corporation (BPCL) is in advanced stages of discussions to acquire Oman's state-owned oil company OQ's stake in Bina refinery project in Madhya Pradesh for around Rs 1,900-2,000 crore,  Moneycontrol has learnt.

According to a source close to the development, the deal is likely to happen before the privatisation of BPCL. The company plans to merge Bina refinery, also known as Bharat Oman Refineries (BORL), with itself. This is expected to raise the valuation of BPCL in the ongoing privatisation process and also provide tax advantage in selling petroleum products.

A BPCL spokesperson did not respond to questions by Moneycontrol.

BORL was an equal joint venture between BPCL and OQ till last year. Following the conversion of warrants of Rs 650 crore in BORL into equity shares in March 2020, BPCL’s shareholding in the joint venture increased to 63.38 percent. The current holding of OQ in BORL is 36.62 percent.

This shareholding pattern is expected to change, factoring in debentures and warrants, which will raise BPCL stake to around 78 percent and bring down OQ stake to around 22 percent, the source added.

According to BPCL annual report, BPCL has given a loan of Rs 1,254.10 crore to BORL and subscribed to share warrants of Rs 935.68 crore. BPCL has also subscribed to zero percent compulsorily-convertible debentures of Rs 1,000 crore.

BORL posted a net loss for the year 2019-20 of Rs 803.5 crore, as compared to a profit of Rs 106.71 crore during the previous year. In 2019-20, Bina refinery’s crude oil intake was 7,913 thousand metric tonnes (TMT) with average capacity utilization of 95 per cent.

The talks for buying Oman’s stake comes at a time when the government is looking to offload its entire stake in BPCL. The Centre's 52.98 percent stake in BPCL is valued at around Rs 47,000 crore based on the current market cap.

Three potential bidders, including Vedanta Group and two private equity funds -- Apollo Global and I Squared Capital --have also expressed interest in BPCL.

BPCL, Air India, Container Corp and Shipping Corp were part of this year's privatisation plans, as the centre had planned to a record Rs 2.1 lakh crore for 2020-21. But that was before the Covid-19 pandemic hit. Now, these plans, along with the planned initial public offering of LIC will be carried over to the next year.

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