Oil India Ltd may pitch for full control of Numaligarh Refinery Ltd (NRL), according to two executives aware of the development. NRL is a subsidiary of state-run Bharat Petroleum Corp. Ltd (BPCL). As part of its strategy to divest stake in BPCL, the government on 21 November decided to carve out NRL from BPCL. BPCL holds 61.65% stake in NRL, while Oil India holds 26% and the government of Assam 12.35%.
Oil India did not reply to an email sent on 6 December. NRL was set up at Numaligarh in Assam’s Golaghat district, in accordance with provisions of the Assam Accord signed on 15 August 1985, and has been associated with the industrial and the economic development of the region. The capacity of NRL is being expanded from the present 3 million metric tonnes per annum (MMTPA) to 9 MMTPA at an investment of Rs. 225.94 billion.
The expansion project is targeted to be completed in four years and expected to meet the refining requirements of the North-East region. The expansion involves laying down a crude oil pipeline from Paradip in Odisha to Numaligarh and a product pipeline from Numaligarh to Siliguri. NRL enjoys the status of a Mini Ratna public sector unit.
“The Assam state government is keen on keeping NRL as it is central to the state. Oil India has also been lobbying hard to take full control of NRL. Citing security concerns, Oil India and the state government have together conveyed their willingness to the central government to acquire NRL," said a senior official from an oil marketing company.
Reports of the BPCL stake sale led to widespread agitations across Assam with the workers’ union in NRL holding regular protests outside the refinery. The refinery has 954 permanent and 2,000 temporary employees. “It would be easier for the government to sell BPCL’s equity in NRL to Oil India as making it an independent entity is more complicated. NRL already exists as a separate entity; only the shareholding changes now," said an investment banker aware of the discussions.
According to BPCL, as of 31 March, NRL’s net worth stood at Rs. 55.51 billion. Last fiscal, NRL recorded revenue of Rs. 185.11 billion, a growth of 16.25% over the previous year. Net profit fell to Rs. 19.68 billion from Rs. 20.45 billion in the previous fiscal year. The company, in a bid to diversify, has entered the upstream business of exploration and production and is in the process of acquiring a 20% stake in Namrup Block from Oil India for which a farm-out agreement has already been signed.
