Bharat Petroleum Corporation Limited (BPCL) plans to launch initial public offering (IPO) of its Bina refinery in Madhya Pradesh next year. The refinery turned in profits in the first quarter of the current financial year. Return to profitability as well as a supportive stock market mean this is a good time to bring Bina refinery IPO. Bharat Petroleum owns 50% stake in Bharat Oman Refineries Limited which owns the refinery while Oman Oil Company is another significant owner with 26% stake. The rest is with financial institutions.
The IPO is required to fund the next stage of expansion for the refinery at a time when Oman Oil Company has declined to invest in the expansion. “We have approved a low-cost expansion and de-bottlenecking for the Bina refinery. The cost of this expansion is going to be about INR3,000 crore (INR30 billion). We have sought the government’s approvals for making fresh investment,” BPCL chairman and managing director S Varadarajan updated reporters.
“The demand (for oil products) in the central and the northern parts (of the country) is very attractive. We need to meet the demand by moving products from the coast,” Varadarajan told shareholders last month at BPCL’s annual general meeting.
The state-owned company has earmarked an investment of INR350-400 billion over the next five years to upgrade and expand its refineries. The investment will facilitate an expansion of BPCL’s daily refining capacity to 1 million barrels.
The Bina refinery’s current capacity is six million metric tonnes per annum (MMTPA) capacity refinery and caters to fuel demands of Northern and Central India. Following the expansion, its refining capacity is expected to increase to 7.8 MMTPA.