ONGC to take 26% in BPCL's Bina refinery

Oil and Natural Gas Corporation (ONGC) has entered into an understanding with Bharat Petroleum Corporation Ltd (BPCL) to pick up a 26 per cent equity stake in the latter's proposed 6 million tonne refinery at Bina, Madhya Pradesh.

"We have a understanding with BPCL for taking 26 per cent equity in Bina refinery and associated facilities," Subir Raha, chairman and managing, director said at a press conference here in connection with the company's public issue.

The government is offloading 142,593,300 equity shares of Rs 10 each, aggregating 10 per cent shareholding in the company's paid up capital, at a price which will be announced a day before the issue opens on March 5. The offer closes on March 13, 2004.

Raha said that the Bina refinery deal is in addition to the general agreement with BPCL which envisages that the two firms can help each other in their downstream and upstream businesses. BPCL's strengths in petroleum retail business can be a big help to ONGC's own plans to the foray the business.

Oman Oil Company was BPCL's original partner in the Central India Refinery project in Bina. But delays forced Oman Oil to restrict its financial interest to less than 2 per cent. BPCL has said in the recent past that the refinery is scheduled for completion by the end of 2006.

ONGC, which is primarily into gas exploration and marketing, has government approval to set up 1,100 petrol stations. Recently, its subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL) also got the licence for an additional 500 petrol stations.

Raha said the petrol station roll out was on track. Raha said MRPL is likely to sell more petroleum products in the domestic markets in the next financial year.

Currently, the three state owned retail companies, Indian Oil, BPCL and Hindustan Petroleum Corp Ltd, were drawing only 6 million tonne of products, against MRPL's rated capacity of 9.69 million tonne.

Currently, MRPL is operating at 115 per cent of its rated capacity. "From next year, MRPL will export only the surplus over 9.69 million tonne," Raha said.