The Oil India (OIL) is all set to acquire the Numaligarh Refinery (NRL) as a crucial meeting to seal the fate of NRL begins at the ministry of Petroleum a few hours from now.
Source close to the OIL’s top management confirmed that they are the only major bidder as the contender Indian Oil Corporation (IOC) has rescinded their interest. However, the Engineers India Limited (EIL) have shown keen interest to pick up a small stake of below 10 per cent.
If all goes well OIL may pick up close to 48 per cent stake, Assam has indicated to pick up the rest to raise its stake to 26 per cent from 12.4 per cent.
Assam Commerce and Industry Minister Chandra Mohan Patowary recently stated the state government’s willingness to pay up to Rs 2,000 crore to pick 13.6 per cent of BPCL stake in the refinery.
Going by this, BPCL’s stake in OIL may be worth over Rs 8,000 crore, including control premium. With the Centre owning over 50 per cent in BPCL, the stake sale in the NRL will help it pocket around Rs 4,000 crore as disinvestment receipt.
BPCL holds 61.65 per cent stake in the NRL, OIL 26 per cent and the Assam government 12.35 per cent.
Privatization of BPCL has become a major political issue in the Northeast with voices being raised not to disturb the refinery’s PSU character. NRL was set up as per the 1985 Assam accord.
The NRL’s high valuation is largely on account of its mega expansion plan. NRL has approved Rs 22,000 crore plan to expand capacity to 9 million tonnes per annum (mtpa) from 3 mtpa.
Sources said though consolidation among oil sector PSUs has been put on hold and integrated OIL-NRL operations could later be considered for a merger with Indian Oil Corporation (IOC) to create a large integrated oil and gas company on the lines of Oil and Natural Gas Corporation (ONGC) that acquired HPCL last year.
NRL recorded the highest revenue at Rs 18,511 crore in 2018-19, registering a 16.25 per cent growth. Its earnings per share stood at Rs 27.79 while net worth reached Rs 5,551 crore.
For OIL, the acquisition will give it an opportunity to enter the lucrative fuel refining with possible entry into retailing at a later stage. With both firms having operations in the Northeast, a lot of synergies is expected to flow out of the proposed deal.
OIL has over 1 lakh sq km for exploration and production activities, most of it in the Northeast, which accounts for its entire crude oil production and the majority of gas output. Rajasthan is the other producing area of OIL, contributing 10 per cent of its gas production.