Cabinet may decide on HPCL stake sale to ONGC today
The Cabinet is likely to consider on Wednesday the sale of government's 51.11 per cent stake in Hindustan Petroleum Corp Ltd (HPCL) to Oil and Natural Gas Corp (ONGC) for over Rs 28,000 crore, a source said.
The Department of Investment and Public Asset Management (DIPAM), ministry of finance, has moved the proposal for consideration of the Cabinet Committee on Economic Affairs (CCEA), said the source who could not be named because the information is not public.
Flowing from Finance Minister Arun Jaitley's Budget announcement of creating an integrated oil company, the government plans to divest its entire 51.11 per cent shareholding in India's third-biggest fuel retailer HPCL to oil producer ONGC.
HPCL will however not be merged with ONGC. It will remain a separate entity and operate as ONGC's subsidiary.
As part of the transaction, HPCL may takeover operations of Mangalore Refinery and Petrochemicals Ltd, the source said.
ONGC currently owns 71.63 per cent of MRPL while HPCL has 16.96 per cent stake in it.
The source said it makes better sense for ONGC to consolidate all the refining operations in one unit, he said.
MRPL will be the third refinery of HPCL, which already has units at Mumbai and Visakhapatnam in Andhra Pradesh.
HPCL stock closed at Rs 368.75, down 2.32 per cent, on BSE, while ONGC ended 1.06 per cent up at Rs 161.75.
After the Cabinet nod, the government will move to appoint valuation and transaction advisers while ONGC too may decide to hire merchant bankers to arrive at the valuation of government shareholding. ONGC had evaluated options of acquiring either HPCL or Bharat Petroleum Corp Ltd (BPCL) - the two downstream oil refining and fuel marketing companies. pti