Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) have kicked on an exercise to synergise operations in their Mumbai based refineries. The companies have plans for sharing infrastructure such as depots, terminals and bottling plants.
BPCL is an integrated oil company with a refining capacity of over 7.3 million tonnes. Its distribution network includes 4,376 petrol pumps, 967 dealers and around 1150 LPG distributors. HPCL operates a total of 10 million tpa, product pipelines with a capacity of 7.67 million tonnes per annum and a 330,000 tonnes per annum lube refinery.
It would be recalled that the Nitish Sengupta committee had actually recommended the merger of the two oil giants inorder to enable them to face the deregulated era. However, HPCL had then opposed the recommendation of the committee. The current agreement seems to be meant to avoid duplication of efforts.
Subsequently, the government rejected the recommendations of the committee and appointed a new committee comprising six think tanks, which gave in a report called the Hydrocarbon Vision 2025.
Interestingly, Reliance had expressed interest in taking over both the companies. Reliance has a 27 million petroleum refinery but no marketing infrastructure, whereas both these companies put together have almost 10,000 petrol pumps spread through the length and breadth of the country.
Both HPCL and BPCL are rated as a buys primarily because of the value of the assets especially their retail network.
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