BackGovt nod for BPCL to invest Rs3,000 crore in JV
BORL needs `3,072 crore for its capacity expansion to 7.8 million tonnes and to produce fuel that meets the latest emission norms
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New Delhi: The union cabinet on Wednesday approved Bharat Petroleum Corp. Ltd’s (BPCL) plan to invest as much as ₹ 3,000 crore in its unit Bharat Oman Refineries Ltd (BORL), which is operating a refinery at Bina in Madhya Pradesh.
An official statement issued after the cabinet meeting said that BORL, a equal joint venture of BPCL with Oman Oil Co., has been making “extraordinary" losses on account of the sharp fall in oil prices and the fresh capital infusion will enable the company to overcome implications of net worth erosion.
The company needs ₹ 3,072 crore for its capacity expansion to 7.8 million tonnes and to produce fuel that meets the latest emission norms.
All state-run refiners are now in the process of upgrading their facilities to produce auto fuel that complies with Bharat Stage 6 emission standards, equivalent to Euro 6 norms, by 2020.
BORL had posted a loss of ₹ 790 crore in 2014-15, up from the ₹ 296 crore loss recorded the pervious year. In 2014-15, the company had a gross refining margin of $6.1 per barrel compared to $9.3 the year before.
According to the cabinet decision, BPCL will buy warrants or other instruments to be issued by BORL, which can be converted into shares. BPCL’s partner Oman Oil indicated it was not prepared to commit further funds for the project at this stage, said the statement.
The expansion of refinery capacity, for which environment clearance has been obtained, will take about three years. State-run Engineers India Ltd has been hired as a consultant. The refinery, which is now operating at full capacity was set up five years ago at a cost of over ₹ 12,500 crore.
The cabinet also approved the use of 400 hectares of un-cultivable farm land at Jetsar in Rajasthan for setting up a 200 megawatt solar power plant. The land is presently in the possession of state-run National Seeds Corp. A public sector company will be chosen for developing the project, the statement said.
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