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BPCL shelves Bina Refinery IPO plan, says it has enough cash for expansion

The past chairman, S Varadarajan, had told PTI in October 2015 that "the IPO would definitely happen next year (2016)"

Press Trust of India  |  Mumbai 

Bharat Petroleum, BPCL
Kuwait Petroleum Corporation is reportedly seeking at least 25% stake in the refinery

State-run (BPCL), which owns in an equal JV with Company, has shelved its IPO plans for the company as "it generates enough cash" to complete the ongoing expansion and as also "because is keen to pick up a stake", says a senior official.

The 1,20,000 barrels-a-day is shut since mid-August for 45 days to synchronise the newly set up units with the existing facility which will raise the capacity to 1,56,000 bpd, the official said further.

The just completed expansion at Bina Refinery, or Bharat Oman Refineries commissioned in 2011, has taken its capacity throughput to 7.8 million tonne from 6 mt now in two phases at a cost of Rs 35 billion, and then to 15 mt at an additional investment of around Rs 200 billion over the next five years.

"Bina is generating enough liquidity for some years now. We don't need any cash from outside to run it. In fact it has made enough cash balances to complete the just completed expansion," R Ramachandran, director-refineries at BPCL, told PTI.

"So, the initial public offer which we had planned and worked does not happen now. At least for the next two-three years. The IPO was planned because our partner was not ready to infuse liquidity as the company for some years were losing money," he added.

The IPO would have given an exit option but now they don't want to leave the JV, he said, adding "moreover, is keen to pick up a considerable minority stake in the company. We are in talks to work out the details."

The past chairman, S Varadarajan, had told PTI in October 2015 that "the IPO would definitely happen next year (2016)."

In financial year 2017, Bina refinery's net profit more than doubled to Rs 8.1 billion. Oil from Kuwait accounted for about 6 per cent of the country's overall imports in FY18.

is reportedly seeking at least 25 per cent stake in the refinery, which may be divested from the present 50 per cent stake that owns in the venture.

In 2009, Oman Oil had paid 50 per cent premium for a re-entry into the Rs 113.97 billion- The project was originally conceived way back in 1993 with the national Omani oil company as an equal JV.

But it agreed to put in only Rs 750 million for a 2 per cent take, but in 2009 it came back to pick up 26 per cent stake in the project for an additional Rs 12.2 billion, which was then increased to 50 per cent.

When worked out this will be yet another Gulf national oil company entering the country which already is the third largest oil consuming market and the fastest growing one as well.

and the Company have already picked up 50 per cent stake in the proposed 60 mt refinery and petchem complex planned in Ratnagiri, Maharashtra.

also operates a 14 mt refinery in Mumbai and a 15.5 mt unit at Kochi. It also has majority stake in the 3 mt Numaligarh refinery in Assam, which will also be expanded to 9 mt over the next decade.

As of March 2018, its crude processing capacity stood at 31.35 mt, at a capacity utilisation of over 117 per cent. Its gas production stood at 1.87 million metric tonnes.

First Published: Sun, September 16 2018. 12:45 IST