BPCL likely to sell stake in Numaligarh Refinery through bidding

Bharat Petroleum Corporation’s (BPCL’s) share in the Numaligarh Refinery (NRL) is likely to be sold through a bidding process to a government-owned entity.

 

The companies that are expected to participate in the bidding include Oil India (OIL), Indian Oil Corporation (IOC), and Oil and Natural Gas Corporation (ONGC). This sale will precede the divestment of BPCL, which is now expected to happen in 2020-21 and not in this fiscal year as planned earlier. The sale process for NRL got delayed initially owing to the protests against Citizenship Amendment Act (CAA) in Assam, which also led to the shutdown of the refinery.

 

While OIL holds 26 per cent in NRL, BPCL and the Assam government have 61.65 per cent and 12.35 per cent equity, respectively. The Centre had already cleared a proposal to ramp up the capacity of NRL from existing 3 million tonne per annum (mtpa) to 9 mtpa at an investment of Rs 22,000 crore.

 

“NRL is back in operations and has achieved already 50 per cent of the throughput prior to the shutdown. The plant is crippling back to normalcy and expect to touch full throughput by January 16,” said a person close to the development. NRL was working on a product pipeline from Siliguri and plans to set up a second generation bio-refinery. During the 2018-19 fiscal year, NRL’s net profit had declined by 3.02 per cent to Rs 1,980.3 crore, asa against Rs 2,041.95 crore during the same period last year. On the other hand, the firm’s revenue from operations was at Rs 18,511 crore, up 16 per cent compared to 2017-18.

 

Crude supplies to the refinery were stopped after protests also affected production from OIL fields. Those fields have also started production now. “All the business in the region is connected as it is indigenous crude and indigenous gas. It cannot be solved by bringing in one shipment of imported crude,” said an OIL official.  The company said OIL was producing 8,900 tonnes a day, which is back to 8,750 tonnes now, before protests began in December.

 

On November 20, the Union Cabinet had cleared the proposal for strategic sale of government’s 53.29 per cent stake in BPCL. However, it stated the sale would exclude the company’s interests in NRL, which is a state-run company will take up.  NRL was incorporated in 1993, as part of the Assam Accord. Hence, Chief Minister Sarbananda Sonowal had written to Prime Minister Narendra Modi seeking an exemption for the company from the divestment process.