Divestment delayed, but petchem plans on the track: Bharat Petroleum

Amid allegations that uncertainty in the divestment process for almost two years has affected Bharat Petroleum Corporation’s (BPCL’s) investment plans, an executive of the state-run major said the delay has not hit the petrochemical expansion plans. The investments for expansion are around Rs 40,000 crore for Bina (Madhya Pradesh), Kochi and Mumbai refineries.

The government had cleared the strategic sale of BPCL way back in November 2019. Bids were invited in March 2020 and submitted in November 2020.

On Wednesday, the Vedanta Group had indicated that it is ready to spend around $12 billion to acquire the government’s stake in the company. Other than Vedanta, private equity firms Apollo Global Management and I Squared Capital had also submitted bids for picking stake in BPCL. There were allegations that the delay has affected the company’s expansion plans.

“There is no delay and we did not put on hold any of the expansion projects. The divestment process has not affected any of our businesses. All those projects are on track, while some are in the exploration stage,” said Vetsa Ramakrishna Gupta, director (finance), BPCL. Gupta added that the company is also exploring the possibility of setting up a 1-2 million tonne per annum petrochemical unit at Bina with an investment of over Rs 25,000 crore. Sources said the company is also pushing for financial benefits from the Madhya Pradesh government for its expansion plans.  

The company’s Rs 11,130-crore specialty petrochemicals investment for producing polyols at Kochi unit was reportedly put on hold because of delay in the divestment process. “A similar delay is there in the ethylene cracker unit planned at Rasayani and also the Bina expansion plans,” said another source.

When asked about this, Gupta said it had recently commissioned the propylene derivatives petrochemical project (Rs 6,000 crore) in Kochi and will take up more projects once it gets stabilised.

“We are exploring projects at all three refineries. We want to focus on commodity petrochemicals. Once detailed feasibility reports are ready, we will look at its viability. All three put together may see an investment of around Rs 40,000 crore,” he said.

In September, BPCL chairman Arun Kumar Singh had said the company lined up an investment of over Rs 1 trillion for the next five years. This is for petrochemicals, renewables and electric mobility, among others.

The government’s plan is to sell its entire 52.98 per cent stake in BPCL with the transfer of management control to a strategic buyer. Based on the current market capitalisation of Rs 86,336 crore, the value of government shares in BPCL is likely to be around Rs 45,740 crore.

“We’re not going to bid aggressively, but will put the right price. The market cap of the company is about $11 billion to $12 billion. So, this is the amount of investment we’re looking at,” Vedanta chairman Anil Agarwal had said on Wednesday.