Business

Cabinet Could Discuss HPCL ONGC Merger Today

न्यूज़ वर्ल्ड इंडिया | 0
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| July 19 , 2017 , 11:00 IST

The cabinet is most likely going to take up the topic of ONGC's proposal to acquire 51.1% stake in the country's third largest refiner-retailer Hindustan Petroleum (HPCL) on Wednesday in a deal size estimated at over Rs 28,000 crore.

The deal size could rise by another 14,600 crores or more if the government does not waive the need for making an open offer to acquire an additional 26% from the market as required under norms.

“The ONGC-HPCL proposal could be taken up by the Cabinet,” a senior government official said. Petroleum Minister Dharmendra Pradhan has twice given public statements that the merger of ONGC and HPCL would be completed in the current financial year.

According to a proposal floated by the finance ministry’s Department of Investment and Public Asset Management (DIPAM), the government is looking to sell its entire 51.11 per cent stake in HPCL to ONGC.

Also Read: Finding BPCL Too Expensive, ONGC Eyes Buying Hindustan Petroleum

According to reports, the finance ministry is seeking a substantial premium from ONGC for the stake it wants to buy in HPCL.

 Oil minister Dharmendra Pradhan said in an interview that, "The Budget has laid the policy. Integration is the need of the hour. Globally, M&As (mergers and acquisitions) are the trend in the oil industry. With the policy in place, companies will chalk out mergers and acquisitions in accordance with their strength and weaknesses. We will see M&A activities in the public sector oil industry in coming days."

HPCL will add 23.8 million tonnes of annual oil refining capacity to ONGC's portfolio, making it the third-largest refiner in the country after IOC and Reliance Industries.