ONGC To Acquire Government Stake In HPCL For Rs 36,915 Crore

Joanna Estrada
January 22, 2018

"We also do not have any plan to tinker with its employee package, etc", ONGC chairman Shashi Shanker said on Sunday, a day after the government accepted its Rs 36,915-crore cash offer to buy the Centre's 51.11% holding in HPCL.

The proceeds from the HPCL stake sale will also help the federal government pay for welfare programmes.

This include Rs 46,500 crore as disinvestment of CPSEs, Rs 15,000 crore from strategic disinvestment and Rs 11,000 crore from listing of insurance companies.

The same though can not necessarily be said for the companies and their minority shareholders. According to government sources, it has already raised Rs 54,337.60 crore so far in FY18 against its annual target of Rs 72,500 crore.

State-owned Oil and Natural Gas Corp () today announced acquisition of government's entire 51.11 per cent stake in oil refiner HPCL for Rs 36,915 crore, paying a premium of over 10 per cent.

With its stake sale in HPCL, the government's disinvestment receipt will work out to be Rs 91,252.6 crore.

In line with this, the ONGC, therefore, proposed to acquire the government's existing 51.11 percent equity shareholding in HPCL.

In July 2017, the Cabinet Committee on Economic Affairs had given the in-principle approval and the alternate mechanism set up for the finalising the price, terms and conditions of the transaction.

"Through this acquisition, ONGC will become India's first vertically integrated "oil major" company, having presence across the entire value chain", the Finance Ministry said.

"Accordingly, as part of the investment management strategy, the Government of India made a decision to explore possibilities of consolidation, mergers and acquisitions within the CPSE space".

ONGC's share had closed at Rs 193.60 on BSE on Friday, down 0.23 per cent over its previous close.

"In this process, ONGC has acquired significant mid-stream and downstream capacity and will attain economies of scale at various levels of operations", it said.

HPCL, which has refineries in Mumbai and Visakhapatnam and a joint venture refinery at Bhatinda with Mittal Energy Ltd, markets around 35 million tonnes of petroleum products with a market share of about 21%.

While the company has around Rs 13,000 crore in cash, its liquid assets include stake in the country's largest refiner Indian Oil Corporation (13.77 per cent) and gas utility GAIL India (4.87 per cent).

Other reports by Click Lancashire

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