India’s BPCL may restart disinvestment process after expansions

MUMBAI (ICIS)–The Indian government, which has called off its disinvestment plans for Bharat Petroleum Corp Ltd (BPCL), plans to restart the sale process once the company completes its various development projects, a government source said on Thursday.

This includes petrochemical expansions at its Kochi, Bina and Mumbai refineries.

BPCL expects to spend around Indian Rupee (Rs) 300 bn ($3.87bn) for enhancing its petrochemical capacity at its three refineries, the official at the Ministry of Petroleum and Natural Gas said.

In September 2021, BPCL had announced plans to spend over Rs1trn over the next five years to develop capacity across various segments. The firm is exploring expansion across biofuels, petrochemicals, consumer retail, digital transformation, electric mobility and gas.

As part of its green energy initiatives, the company is also planning capacities in solar, wind and hydrogen energy along with second generation (2G) ethanol biorefineries.

“These petrochemical and renewable energy projects will help BPCL remain competitive in the market, making it more lucrative to prospective buyers in the future,” the government source said.

On 26 May, the government called off its disinvestment process for BPCL after two of the three companies that had shown interest withdrew their bids.

“The multiple COVID-19 waves and geopolitical conditions affected multiple industries globally, particularly the oil and gas industry. Owing to prevailing conditions in the global energy market, the majority of qualified interested parties have expressed their inability to continue in the current process of disinvestment of BPCL,” the Department of Investment and Public Asset Management (Dipam) said in a statement.

The government had called off the current disinvestment plan and a decision on re-initiating the strategic disinvestment process would be taken after reviewing the situation, the Dipam note said.

The Indian government had approved the sale of its stake in BPCL in November 2019.

Global metals and mining company Vedanta Group and two American funds – Apollo Global and I Squared Capital had expressed interest in acquiring the government’s 52.98% stake in BPCL.

BPCL is currently conducting feasibility studies for its proposed projects at its Kochi refinery in southern Kerala state and Bina refinery in central Madhya Pradesh state.

The company expects to complete these capacity additions by 2026-27, the government source said.

BPCL is examining the feasibility of setting up a polypropylene (PP) plant at the Kochi refinery after discontinuing its specialty polyols petrochemical project due to cost overruns.

The company also plans build a 50,000 tonne/year super absorbent polymer (SAP) plant near its Kochi refinery.

BPCL is exploring the possibility of setting up a petrochemical complex at its Bina refinery, which will include a 1.5m tonnes/year ethylene cracker.

Other plans include a 3m tonne/year petrochemical residual fluidized catalytic cracking plant (PRFCC) and a 450,000 tonne/year PP plant at its Mumbai complex in western Maharashtra state.

Focus article by Priya Jestin

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