Enhancement of Investment by Bharat Petroleum Corporation Limited in Bharat Oman Refineries Limited
No: --- Dated: Apr, 27 2016
The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval to enhance investment by Bharat Petroleum Corporation Limited (BPCL) in Bharat Oman Refineries Limited (BORL). The investment amount could be enhanced upto a maximum of Rs.3000 crore by way of subscription of convertible warrants / other instruments giving right to convert it into equity shares to be issued by BORL, beyond DPE guidelines dated 05.08.2005.
The infusion of funds by the BPCLs will enable BORL to overcome the implications on account of the erosion of the net worth. Besides it will enhance the availability of petroleum products in the Northern and Central parts of the country, industrial development of Madhya Pradesh and substantial increase in employment and tax earnings in the State.
Background:
Bharat Petroleum Corporation Limited (BPCL) is a public sector undertaking under the Ministry of Petroleum and Natural Gas. It has promoted a joint venture company with Oman Oil Company Limited (OOCL) named Bharat Oman Refineries Limited (BORL). The BORL has commissioned the 6 MMTPA (120 Thousand Barrels Per Day) Refinery at Bina in Madhya Pradesh, in June, 2011 at a project cost of about Rs. 12,754 crore. Currently the refinery is operating at 100% of its installed capacity.
The company now proposes to undertake a debottlenecking project at the refinery to further increase the refining capacity from 6 MMTPA to 7.8 MMTPA. The estimated project cost is Rs.3,072 crore, with an overall implementation schedule of 36 months from date of receipt of environmental clearances (Zero Date). The highlights of the proposal for debottlenecking project include 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. OOCL while expressing their support for the project, had indicated that they are not prepared to commit further funds for the project at this stage. Therefore, BPCL Board has decided to infuse funds to the tune of Rs 3,000 Crore for funding 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.
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 Rs. 3,000 crore for completion of the de-bottlenecking project.