State-owned oil and gas explorer Oil India (OIL) and the Assam government may acquire Bharat Petroleum Corporation’s entire 61 per cent stake in the Numaligarh Refinery (NRL), retaining the public sector character of the Assam-based entity.
According to official sources, while OIL may pick up close to 48 per cent stake, Assam has indicated to pick up the rest to raise its stake to 26 per cent from 12.4 per cent.
Assam Commerce and Industry Minister Chandra Mohan Patowary recently stated the state government’s willingness to pay up to Rs 2,000 crore to pick 13.6 per cent of BPCL stake in the refinery.
Going by this, BPCL’s stake in OIL may be worth over Rs 8,000 crore, including control premium. With the Centre owning over 50 per cent in BPCL, the stake sale in the NRL will help it pocket around Rs 4,000 crore as disinvestment receipt.
BPCL holds 61.65 per cent stake in the NRL, OIL 26 per cent and the Assam government 12.35 per cent.
Privatisation of BPCL has become a political issue in the Northeast with voices being raised not to disturb the refinery’s PSU character. NRL was set up as per the 1985 Assam accord. The All Assam Students Union (AASU), one of the signatories to accord, has also protested.
“OIL best fits the bill to take over NRL because of the synergy arising from their operations largely being located in the Northeast and its existing investment in NRL. Being the largest shareholder, the government may get OIL board to approve the takeover,” said an official source privy to the development.
Though estimates for the NRL acquisition would be finalised post-demerger of the refinery from BPCL as per the cabinet decision, it’s expected that OIL may have to invest around Rs 6,000 crore to pick up the BPCL stake. Another Rs 2,000 crore may be put by the Assam government.
The NRL’s high valuation is largely on account of its mega expansion plan. NRL has approved Rs 22,000 crore plan to expand capacity to 9 million tonnes per annum (mtpa) from 3 mtpa.