Cabinet nod for HPCL and ONGC merger likely in few weeks
The future of India's third-largest fuel retailer, Hindustan Petroleum Corp Ltd (HPCL), is in the hands of the Cabinet. If everything goes as planned, the Cabinet will approve this month the sale of government's 51 per cent stake in HPCL to the nation's largest fuel retailer, Oil and Natural Gas Corporation (ONGC), for over Rs 26,000 crore.
The Ministry of Finance's Department of Investment and Public Asset Management (DIPAM) is already in the process of moving a note for consideration of the Cabinet. OVERDRIVE has learnt that the proposal may come before the Cabinet within the next 10 to 15 days. However, the deal is likely to be completed within this fiscal year.
Since the Finance Minister Arun Jaitley talked about creating an integrated oil company while announcing this year's budget, ONGC was evaluating the possibility of acquiring two downstream oil refining and fuel marketing companies - HPCL and Bharat Petroleum Corp Ltd (BPCL). As acquiring the second-largest fuel retailer BPCL would be too expensive, ONGC shifted its focus to HPCL. After a few inter-ministerial consultations, DIPAM is approaching the Cabinet for a nod for the biggest merger in Indian oil sector.
India has six major companies in the oil sector – ONGC, Oil India Ltd, Indian Oil Corp (IOC), HPCL, BPCL and GAIL. While ONGC and Oil India Ltd are the oil producers, IOC, HPCL and BPCL are into refinery business. Only GAIL is in the midstream gas transportation business.
If the proposed merger gets the Cabinet nod, HPCL-ONGC would be the third-largest refiner in India after IOC and Reliance Industries.