BPCL to invest an additional Rs3,000 cr in Bharat Oman Refineries
29 Apr 2016
Bharat Petroleum Corporation Limited (BPCL) will invest up to Rs3,000 crore in Bharat Oman Refineries Limited (BORL) to increase its stake in the joint venture refinery.
Bharat Oman Refineries Limited (BORL) is a joint venture of BPCL and Oman Oil Company Limited (OOCL). BORL has commissioned a 6 MMTPA (120,000 barrels per day) refinery at Bina in Madhya Pradesh, at a project cost of about Rs12,754 crore.
The investment will be done by way of subscription of convertible warrants / other instruments that are convertible into equity shares to be issued by BORL.
The union cabinet chaired by the Prime Minister Narendra Modi on Wednesday gave its approval to enhance BPCL's investment in Bharat Oman Refineries Limited (BORL), beyond DPE guidelines issued in August 2005.
Currently the refinery operates at 100 per cent of its installed capacity.
The company plans to undertake debottlenecking at the refinery to further increase refining capacity from 6 MMTPA to 7.8 MMTPA.
The estimated project cost is Rs3,072 crore, with an overall implementation schedule of 36 months from date of receipt of environmental clearances.
The debottlenecking project also includes certain modifications to produce products in accordance to the new Auto Fuel Policy. Hence, there is a need for immediate infusion of funds in BORL by the shareholders.
The joint venture partner, OOCL, while expressing support for the project, had indicated that it is not prepared to commit further funds for the project at this stage.
Therefore, BPCL board has decided to infuse funds to the tune of Rs3,000 crore for the debottlenecking project and for meeting the extraordinary losses suffered on account of the sharp fall in the prices of crude oil and finished products.
The government has, accordingly, decided to grant approval to the proposal of BPCL to enhance its investment in BORL by an additional amount of up to Rs3,000 crore for completion of the de-bottlenecking project.
The infusion of funds by the BPCL will enable BORL to overcome the problem of erosion of net worth.
Besides it will help in the industrial development of Madhya Pradesh, enhance the availability of petroleum products in the northern and central parts of the country and substantially increase employment and tax earnings in the state, a petroleum ministry release stated.