InvestorQ : What would be the implications of Oil India buying a stake in Numaligarh Refineries of BPCL?
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What would be the implications of Oil India buying a stake in Numaligarh Refineries of BPCL?

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4 months ago
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India’s second largest state-owned oil extractor, Oil India Limited, will bid in consortium with Engineers India Limited to acquire a 61.65% stake in the Numaligarh Refinery unit of BPCL. The government had clarified at the time of the divestment itself that Numaligarh Refinery would not be part of the stake sale in BPCL.

Assam government holds 12.35% stake in Numaligarh Refinery and so the exact stake of Oil India and EIL in Numaligarh Refinery will depend on the right of refusal exercised by the Assam government. Assam government had given NOC to the Numaligarh Refinery deal subject to the condition that another 13.65% stake in NRL will be sold to the state increasing the Assam government's stake in NRL to 26%.

It is likely to be a win-win situation for Oil India as the acquisition is expected to improve synergy in the extractor’s portfolio. Oil India is an upstream extractor and its profitability is too vulnerable to the vagaries of the crude prices. With addition of the refining business, its overall business becomes a more integrated game of extraction and refining. Oil India already has a 26% stake in Numaligarh Refinery Limited.

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