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Bharat Petroleum Corporation Ltd (BPCL), which is set to be privatised, announced on Monday that it will sell its entire stake in the Numaligarh refinery in Assam to a consortium led by Oil India Ltd and Engineers India Ltd for Rs 9,876 crore.

The sale of Numaligarh Refinery Ltd clears the way for the second-largest fuel retailer in India to be privatized.

The government chose to keep Numaligarh Refinery Ltd (NRL) in the public sector in accordance with the Assam Peace Accord. BPCL was to sell its entire 61.65% stake to state-owned companies as part of this deal.

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The sale of the stake was approved by the BPCL board on Monday after a consortium of Oil India Ltd, Engineers India Ltd, and the Government of Assam expressed interest.

“The board of directors of BPCL approved the proposal for sale of all equity shares in NRL held by BPCL to a consortium of OIL and EIL and to the Government of Assam at its meeting held on March 1, 2021,” the company said in a filing to the stock exchanges.

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A total of Rs 9,875.96 crore would be paid out.

OIL and Engineers India Ltd are expected to buy 49 percent, with the remaining 13.65 percent going to the Assam government.

In Assam, NRL runs an oil refinery with a capacity of 3 million tonnes per year.

The Government of Assam owns around 12.35 percent of NRL, while OIL owns 26%.

Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management, tweeted, “The BPCL privatisation process is moving forward, with the company’s board of directors deciding to sell its 61.65% stake in NRL for Rs 9,875.96 crore, with control transferred. The stakes will be picked up by OIL, EIL, and the Assam government “,

BPCL will have three refineries after the sale of the NRL: Mumbai, Kochi (Kerala), and Bina (Madhya Pradesh).

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In the nation’s largest privatization to date, the government is selling its entire 52.98 percent stake in BPCL.

The government’s stake has been expressed of interest by Vedanta Group, Apollo Global, and I Squared Capital’s Indian unit Think Gas.

NRL’s sale is the first step in BPCL’s disinvestment.

The government has stated that the privatization of BPCL will be completed in the first half of the fiscal year, which begins in April (2021-22).

The sale is critical to meeting the disinvestment target of Rs 1.75 lakh crore for 2021-22.

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The buyer will own approximately 15.33% of India’s oil refining capacity and 22% of the fuel marketing share, according to BPCL.

With an investment of Rs 22,594 crore, NRL plans to increase its refining capacity from 3 million to 9 million tonnes per year. By 2024, the project should be finished.

A crude oil pipeline will be built from Paradip, Odisha, to Numaligarh, as well as a product pipeline from Numaligarh to Siliguri, West Bengal, as part of the expansion.

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BPCL agreed last month to buy out Oman Oil Company’s shares in the Bina refinery project for about Rs 2,400 crore in the run-up to the privatization.

Bharat Oman Refineries Ltd (BORL), which built and operates a 7.8 million tonne oil refinery in Bina, is owned by BPCL, which owns a 63.68 percent stake. OQ S.A.0.C. (formerly known as Oman Oil Company S.A.0.C.) will sell it 36.62 percent of the equity share capital for Rs 2,399.26 crore.

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BORL was founded in February 1994 with the intention of constructing a refinery in Bina. The unit was designed to convert 6 million tonnes of crude oil into fuel per year at first, but that capacity was later increased to 7.8 million tonnes.