InvestorQ : Can you tell me about the proposed investment of Rs140,000 crore by BPCL on future endeavours? Is the company not being divested by the government?
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Can you tell me about the proposed investment of Rs140,000 crore by BPCL on future endeavours? Is the company not being divested by the government?

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Deepa Salunkhe answered.
1 month ago
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BPCL plans to invest close to Rs1.40 trillion in its petrochemicals, city gas and clean energy projects over the next five years. It may be recollected that the government had originally planned to hive off its 52.98% stake in full. However, amidst protests from employees and creditors as well as amidst too low valuations, the government has put off that plan. Now the government is using the interim period to invest more into the company and create more value out of the business for its shareholders to enhance its future value.

The theme of the expansion will be green. Countries across the world are now opting for cleaner, carbon-free fuel. Hence, gas is being seen as a transition fuel that is cleaner and greener till the time electric mobility and hydrogen gather pace. BPCL will diversify into adjacent and alternative businesses for additional revenue streams and also as a hedge against a carbon free future. Currently, BPCL owns about a fourth of the petrol pumps in India and will also use this network to provide EV charging as well as fuels like hydrogen.

Over the next few years, BPCL plans to transform its fuel stations into energy stations, that would offer all forms of energy solutions for mobility, like petrol, diesel, natural gas, EV solutions, flexi fuels and, eventually hydrogen. BPCL has about 14% of the total refining capacity in India with production located at Mumbai, Bina and Kochi. Its product focus will now be on petchem, gas, renewables, e-mobility and upstream.

The capex outlay for this entire transformation is estimated at around Rs140,000 crore. To begin with, it will set up the petchem projects at its oil refineries at Bina and Kochi. To expand its natural gas franchise, BPCL will also bid for city gas retailing licenses. BPCL will also look to install up to 1 Gigawatt of renewable electricity generation capacity and blend more than 10% ethanol in petrol. BPCL also looks to create highway fast charging corridors to allow electric car owners to overcome the range anxiety, which is normal in e-cars.

There is interesting progress in the upstream exploration area too, which will be in close association with oil and gas development projects in Brazil to Mozambique. In Brazil, BPCL has a tie up with Petrobras.

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