BPCL’s Bina refinery IPO in six months

Bharat Petroleum Corp (BPCL), state-owned oil refiner and retailer, has said that its subsidiary Bharat Oman Refineries will come up with an initial public offer (IPO) within six months, after a possible pre-IPO private placement.

“We will do the IPO, but there are certain investors who are looking actively at investing before it. The whole process should take about six months,” BPCL chairman and managing director Ashok Sinha said. Bharat Oman Refineries, in which Oman Oil is other partner with 50% stake, is building an oil refinery at Bina in Madhya Pradesh.

Sinha did not specify who the interested investors were, but did not rule out a further investment by Oman Oil. “We are talking to them as well as others,” he said. BPCL has been trying to get the Omani firm to plough in more money into the refinery as nearly all of the Rs 10,100 crore committed to the project has come from BPCL or from debt on the JV’s balance-sheet.

Though the project started out with a funding plan involving Rs 4,000 crore of equity and Rs 6,000 crore of debt, Oman Oil has not invested more than Rs 75 crore. The refinery, however, is on track to be completed by December and will start operations in the fourth quarter.

In addition to the estimated Rs 10,000 crore for the project, which includes the supply pipeline, another Rs 1,045 crore is being spent to put up a dispatch terminal and pipeline to evacuate the refined products.

BPCL also said it has filed a case against Vijay Mallya’s Kingfisher Airlines, which owes it nearly Rs 314 crore in overdue payments for jet fuel. BPCL and Indian Oil Corp have both stopped supplying aviation fuel to the airline a few months back. The company sees its aviation fuel sales dropping from 9,17,000 litres last year to 7,00,000 litres this year, partly due to the slowdown in the sector.

CMD Sinha also said the company’s entry into the renewable energy sector will start bearing fruits with its one megawatt solar field in Mohali in Punjab going commercial within three months. He said that the tariff of Rs nine per unit promised by the Punjab government was competitive since the cost of power will be around Rs 6.10 per unit. “We are interested in setting up more such projects in many other states, but the challenge is to find the land,” he said.

On BPCL’s Rs 2,131 crore Jatropha-based bio-diesel project in Uttar Pradesh, Sinha said he does not expect revenues coming in before the year 2013-14 as the plants will take three years to start producing the oil-bearing seeds. “Meanwhile, we will explore other options to produce bio diesel,” Sinha said.

The project, which also involves setting up 10 bio-diesel refineries in UP, is expected to supply around one million tonnes of diesel annually, out of BPCL’s total production of around 12 million tonnes of diesel at present. BPCL has emerged out of its ‘cash conservation’ mode with plans to add nearly 500 new outlets this year - last year it added about 150 — to its total 8,400 outlets.