Bina refinery to raise Rs 2,900cr through IPO

Bharat Oman Refinery Ltd (BORL), an equal joint venture between Bharat Petroleum Corporation (BPCL) and Oman Oil Company, has filed a draft red herring prospectus with market regulator Securities and Exchange Board of India (Sebi) for raising around Rs 2,900 cr by offering part of its shares to the public.

Before the share sale, BORL, which is constructing a 6-mn tonne per annum crude oil refinery at Bina in Madhya Pradesh, will privately place shares worth around Rs 900 crore with its promoter BPCL and another Rs 26.90 crore worth of shares with the Madhya Pradesh government, a company official said.

The share sale to the public and the private placement is likely to constitute around 48 per cent of the equity capital of BORL. After the share sale Oman Oil’s stake in the company is expected to come down to around 10 per cent while BPCL will hold around 48 per cent.

The company official said the company was going ahead with raising money through a share sale in spite of a volatile market as refinery margins are expected to remain strong in the near- to mid-term.

The money raised from the share sale to the public will be used to fund the refinery at Bina. The Rs 10,400-crore refinery, which is expected to be completed by January 2010, is being funded by a combination of debt and equity in the ratio of 1.6:1, the company said in a statement. BORL has already raised Rs 6,400 crore as debt from a consortium of lenders.

The refinery is being designed with a Nelson complexity index of 9.1, the company said. Reliance Petroleum’s under-construction refinery in Gujarat has a Nelson complexity index of nearly 15, one of the highest in the world. A higher complexity index means higher sulphur crude oil can be processed by the refinery. The higher the sulphur content in the crude oil, the cheaper is the oil.

The BORL project also includes a crude oil importing and storage system in Vadinar in Gujarat. The terminal will be connected to the refinery through a 935-km crude oil supply pipeline.

BORL already has a product off-take agreement with its promoter BPCL. The products will be marketed in India, with no quantity of products being exported. The BORL statement said that BPCL intends to construct a marketing terminal at Bina and a pipeline connecting the marketing terminal to its existing product pipeline between Mumbai in the western part of the country and Bijwasan in the north.