Bharat Petroleum shelves Bina Refinery IPO plan
Bharat Petroleum has shelved its Bina Refinery IPO plan as ‘it generates enough cash’ to complete the ongoing expansion and also ‘Kuwaiti Petroleum is keen to pick up a stake”, a senior official said
Mumbai: State-run Bharat Petroleum (BPCL), which owns Bina Refinery in an equal JV with Oman Oil Company, has shelved its IPO plans for the company as “it generates enough cash” to complete the ongoing expansion and as also “because Kuwaiti Petroleum is keen to pick up a stake”, says a senior official.
The 1,20,000 barrels-a-day Bina Refinery 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 ₹3,500 crore, and then to 15 mt at an additional investment of around ₹20,000 crore 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 Oman Petroleum was not ready to infuse liquidity as the company for some years were losing money,” he added.
The IPO would have given Oman Oil an exit option but now they don’t want to leave the JV, he said, adding “moreover, Kuwaiti Petroleum 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 fiscal 2017, Bina refinery’s net profit more than doubled to ₹810 crore. Oil from Kuwait accounted for about 6% of the country’s overall imports in FY18. Kuwait Petroleum Corporation is reportedly seeking at least 25% stake in the refinery, which may be divested from the present 50% stake that Oman Oil owns in the venture.
In 2009, Oman Oil had paid 50% premium for a re-entry into the ₹11,397-crore Bina Refinery. 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 ₹ 75 crore for a 2% take, but in 2009 it came back to pick up 26% stake in the project for an additional ₹1,220 crore, which was then increased to 50%. 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. Saudi Aramco and the Abu Dhabi National Oil Company have already picked up 50% stake in the proposed 60 mt refinery and petchem complex planned in Ratnagiri, Maharashtra.
BPCL 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%. Its gas production stood at 1.87 million metric tonne.