BPCL-Oman postpones IPO plans

Bharat Oman Refineries (BORL) - a joint venture between Bharat Petroleum Corporation and Oman Oil Company for implementing the 6 million tonnes per annum (mtpa) greenfield refinery at Bina, Madhya Pradesh - has decided to defer its proposed initial public offer by a few months. It will instead look for "strategic financial investors".

The IPO was scheduled for March 2008.

"We are looking at other equity funding options. We also want to give Oman Oil, our joint venture partner, some more time to reconsider its decision to exit from the Rs 10,400 crore project," said a senior BPCL executive.

BPCL and Oman Oil had contributed Rs 75 crore each towards the joint venture company's equity. Oman Oil, however, decided not to pump in any more equity into the 10-year old project, which will be financed in a debt-equity ratio of 1.6:1.

The debt component of Rs 6,400 crore was recently sewed together with a syndicated loan from 14 banks led by the State Bank of India.

During 2007, BPCL invested Rs 900 crore in fully convertible debentures issued by BORL, thereby taking BPCL's total equity contribution in BORL to Rs 975 crore.

Oman Oil's final decision is critical in deciding the company's future course of action.

There is a lot of interest in the country's refining sector and finding investors would not be a challenge, according to analysts.