OIL, IOC may get Numaligarh refinery as govt 'wants to keep it' with a PSU

The strategic sale of 53.29 per cent in Bharat Petroleum Corporation (BPCL) would be done without Numaligarh Refi-nery (NRL), Finance Minister Nirmala Sitharaman said on Wednesday. So, the first hurdle before the government in the strategic sale of BPCL, for which it is running against time, would be the fast demerger of the Northeast-based refinery. 

BPCL holds 61.65 per cent  in NRL and analysts say BPCL’s sale without NRL is likely to have an impact of Rs 40 per share. “The challenge before the government will be to do the valuation of NRL first, and that is likely to delay the process of the BPCL strategic sale,” said an expert. At current trading prices, government’s stake in BPCL is valued at around Rs 59,000 crore. The firm’s share price was down 5.66 per cent on Thursday.

Sources say exploration major Oil India (OIL) or Indian Oil Corporation (IOC) could bag NRL, as the government has decided to keep it with a public sector undertaking. An official from one of these oil firms told Business Standard the refinery might make more synergy with OIL, as a majority of its producing fields are in the Northeast and it already holds 26 per cent in the refinery (remaining stake is with the Assam government). 

A major reason why the government kept NRL outside the strategic sale of BPCL was its importance to the Assam Accord. Assam Chief Minister  Sarbananda Sonowal had also written to Prime Minister Narendra Modi, asking the government to keep NRL kept out of the strategic sale of BPCL as it is closely related to the state’s history.

Union Petroleum Minister Dharmendra Pradhan, meanwhile, hinted on Thursday that IOC and other public sector undertakings might not be in race for the strategic sale of BPCL.

“Since 2014, we have a clear vision that the government has no business to be in business,” Pradhan said, adding that private participation in sectors like telecom and aviation benefited the customers in the form of price cut. There are speculations in the market that foreign players like Saudi Aramco, ExxonMobil and Total may be keen to buy BPCL. There are also speculations that BPCL may monetise its stakes in Indraprastha Gas (IGL) and Petronet, prior to its disinvestment. The company holds 22.5 per cent stake in IGL and 12.5 per cent in Petronet.

“With the Cabinet decision, there is clarity in the asset on offer. Given the quality of the assets, people and processes in place and the potential of the Indian energy markets, we are expecting significant interest from several global energy companies for BPCL,” said Debasish Mishra, leader of energy, resources and industrials at Deloitte.