Bongaigaon Refinery and Petrochemicals Ltd (BRPL) will shortly be merged with the Indian Oil Corporation (IOC) with the ministry for petroleum and natural gas circulating a Cabinet note to the effect.
The Cabinet Committee on Economic Affairs is expected to take a final decision when it meets after the conclusion of the ongoing budget session of Parliament.
The merger proposal has already been cleared by the boards of both IOC and BRPL.
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The Cabinet note has proposed that the 74 per cent stake in BRPL held by the central government be transferred to IOC, thus paving the way for the merger of the two. The note clarifies that the merger is essential for the survival of BRPL and would be extremely beneficial for IOC.
The refinery has been passing through a period of uncertainty after the Disinvestment Commission recommended the sale of the government's share leading to a widespread protest from employees.
The then petroleum minister V K Ramamurthy had assured the employees that he would "not allow the disinvestment of BRPL" as he had special affection for the people of the northeast.
The merger proposal has now been revived and the Cabinet note argues that BRPL does not have its own marketing network and is dependent on IOC for selling its products. It has said the merger will be beneficial for both since IOC has an extensive marketing network all over the country.
Moreover, according to the note, IOC also has the financial backing to be able to market the entire production of BRPL.
The note asserts that it is the supply of crude for refining where IOC's assistance would be most essential, as the refinery is already operating below its optimum level because of non-availability of crude oil.
With Assam already running short of crude oil production, BRPL has to depend on imported crude being reverse pumped from the Haldia port.
The commissioning of the three million metric tonne per annum (MMTPA) Numaligarh refinery has further worsened the crude availability position in the state.
It is expected that the merger proposal would now go through without any hitch since the Centre has the support of even the state government.