With Oman Oil Company reluctant to put more money, the Government on Wednesday allowed Bharat Petroleum Corp ltd (BPCl) to fund the Rs3,000-crore expansion of Bina refinery in Madhya Pradesh by putting in more equity.
BPCl, India’s second-biggest state refiner, plans to raise Bina refinery capacity in two phases - to 7.8 million tonnes a year from current six million tonnes at a cost of Rs3,072 crore by 2018 and then to 15 million tonnes at an additional investment of Rs18,000-20,000 crore in five-six years. The Cabinet chaired by Prime Minister Narendra Modi gave its approval to enhance investment by BPCl in Bharat Oman Refineries limited (BORl) for the first phase of expansion.
“The investment amount could be enhanced up to a maximum of Rs3000 crore by way of subscription of convertible warrants / other instruments giving right to convert it into equity shares to be issued by BORl,” an official statement said. The infusion of funds, it said, will enable BORl to overcome the implications on account of the erosion of the net worth. The expansion will enhance the availability of petroleum products in the northern and central parts of the country. Oman Oil Company (OCC), which holds 26 per cent stake in the Bharat Oman Refineries (BORl) the firm that built the refinery is unwilling to participate in the expansion.
OCC in 2009 paid a 50 per cent premium for a re-entry into the Rs11,397-crore Bina refinery project. The project was originally conceived through a joint venture company, BORl but the OCC did not contribute equity beyond the initial Rs75 crore.