Privatization bound BPCL Board approves of the amalgamation of BORL

Amalgamation is expected to enhance the valuation of BPCL bound for privatization but rising fuel prices may act spoiler.

Bharat Oman Refineries Limited was incorporated as a Joint Venture between Bharat Petroleum Corporation Limited and OQ SAOC (formerly known as Oman Oil Company SAOC) in the year 1994 to set up a central India refinery under a bilateral agreement. 

The company commenced its commercial operation in the year 2011. In the year March 2020, the company become a subsidiary of Bharat Petroleum Corporation Limited and in July 2021, OQ SAOC entire shareholding was purchased by Bharat Petroleum Corporation for Rs 2400 crore. Government of Madhya Pradesh was also one of its stakeholders in the company also exited in the year September 2021. 

At present, the company is a wholly-owned subsidiary of Bharat Petroleum Corporation Limited. It has a capacity of 7.8 MMTPA with the capability to produce 100 per cent BS-VI specifications fuel. 

In the Board Meeting held on October 21, the scheme of amalgamation has been approved by the members. The amalgamation will consolidate BPCL’s presence in Bina facilitating future expansion and diversification in the region. BPCL, which is a Maharatna PSU holds 14-15 per cent of the country’s total refining capacity. Amalgamation is expected to enhance the valuation of BPCL bound for privatization by enhancing its refining capacity. 

The privatization is expected to be completed by March 22 and is expected to fetch the government Rs 1 lakh crore from the divestment of its entire 53 per cent stake in the company.

However, the stock has borne the brunt at the bourse amid rising fuel prices. Petrol price in Delhi stands at Rs 106.89 per litre while diesel is available for Rs 95.62. In Mumbai, petrol is retailing at Rs 112.78, while diesel costs Rs 103.63. Consequently, the shares of BPCL were trading in red at Rs 447 with a loss of 0.90 per cent at the closing bell.