The board of Bharat Petroleum Corporation Ltd (BPCL) has decided to initiate the process of selling its 61.65 per cent stake in subsidiary Numaligarh Refinery Ltd (NRL) amidst indications that the Assam government may not be interested in buying the entire stake by exercising a right of first refusal.
“The government has decided that BPCL will be privatised after hiving off NRL, which will be sold to a government company in the oil sector if the Assam government declines to exercise its right of first refusal to buy the shares owned by BPCL in NRL,” a government official said.
“On Thursday, BPCL wrote to the Chief Secretary of Assam requesting him to spell out the State government’s stand within two weeks on exercising the right of first refusal to buy the shares held by BPCL in NRL,” the official said.
What the MoU says
The memorandum of understanding signed by BPCL and Assam government mandates that if either party decides to sell their stakes in NRL, the first right over such shares will be given entirely to the other party.
“If the Assam government don’t show interest and the indications are that they are not interested, we will undertake the sale process through DIPAM which will be handled by the transaction advisors and asset valuers appointed for the BPCL stake sale,” he said.
The Assam government, he said, will neither have the capability nor the money to run NRL on its own. The State government owns 12.35 per cent stake in NRL and it has apparently show willingness to increase the stake to 26 per cent to secure privileges available to entities holding 26 per cent under the Companies Act.
So, they may be interested in raising their stake from 12.35 per cent to 26 per cent if they decide to exercise their right granted by the MoU; beyond that they may not because they cannot run the refinery.
Hence, the balance shares have to be given to some other government company in the oil sector which will be sold through a bidding process carried out by DIPAM,” the official said.