Bharat Petroleum Corporation is confident of holding its own in the fuel retailing arena once private players like Reliance Industries make a comeback.
“We are fully geared to meet future challenges and are confident of surpassing targets and market expectations,” Chairman and Managing Director, S Varadarajan, said at a press meet here on Thursday evening.
For the first time in over six years, diesel prices are at par with market levels which could prompt the Government to officially declare this a deregulated fuel. This has largely been achieved thanks to the monthly price hikes of 50 paise since January last year coupled with the rapid fall in global crude prices to less than $100/barrel.
As a result, there could be a respite from the 50 paise hike for some months considering the subsidy element in diesel has been completely wiped out. Public sector oil companies are, on the contrary, making profits of 35 paise per litre on diesel though this could be a temporary phase given the uncertainty in world markets.
This could also be the ideal time for the Government to free diesel prices which will prompt players like Reliance to re-enter the retail space after many years. “We do expect private players to come back and are all for excitement and competition,” Varadarajan said.
BPCL’s confidence stems from the fact that it has got closer to its customers thanks to a host of retail initiatives. Today, its throughput per outlet (it has over 12,500 across the country with plans to add more) is at least 20 per cent higher than competition.
Over the next four years, the company will be spending close to Rs 45,000 crore for various projects in refining, marketing and exploration. This will include capacity expansion at its Kochi refinery from 9.5 million tonnes to 15.5 mt which will involve an outlay of Rs 16,500 crore.
The Bina refinery will, likewise, see Rs 2,900 crore spent on increasing capacity from 6-8 mt. BPCL is exploring the option of an initial public offering for the Bina refinery (a joint venture with Oman Oil) after kicking off this low-cost expansion next year.
According to Varadarajan, a feasibility study is also underway to expand the Numaligarh refinery’s capacity from 3-9 mt. This will include laying a crude pipeline from the east coast to the facility in Assam.
Products will be evacuated through an existing network pipeline to eastern Uttar Pradesh while neighbouring countries like Bangladesh could also be considered as auto fuel markets. This expansion will cost at least Rs 15,000 crore and will be viable only if there is Government support that generally extends to projects in the Northeast.
In the upstream space, BPCL will look at forking out close to $2 billion (Rs 12,000 crore) for work on blocks in Mozambique and Brazil in the coming years.