Govt may shut doors on consolidation in public sector oil firms

Govt may shut doors on consolidation in public sector oil firms

Government may shut doors on further consolidation in the public sector oil companies but allow companies to diversify and grow organically to achieve the scales that matches the performance of international and domestic private sector oil and gas companies.

Sources in the government said that unpleasant experience in the last year”s merger of PSU oil refiner and retailer HPCL with upstream major ONGC has tilted the equation in favour of organic growth for state-owned oil companies. There is also a thinking that government should have no role in oil being a non core sector and most operations should be privatised.

The government”s fresh thinking could seal the fate of an earlier plan to create an integrated public sector ”oil major” by merging companies having synergy of operations. Under that plan, the first case of ONGC-HPCL merger was completed last year and there was another plan in works to split gas transportation company GAIL into two and merge one of the entities with either IOC or Bharat Petroleum Corporation.

According to sources, the fallout of the fresh move could also be that PSUs may not be encouraged to bid for Bharat petroleum Corporation Ltd. (BPCL), where government is selling its entire 53.29 per cent equity to a strategic investor. Read More

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