Oil and Natural Gas Corporation (ONGC), India’s state-run petroleum explorer, may look at selling its existing stake in other Public Sector Undertakings (PSUs) to partly fund a planned acquisition of downstream refiner Hindustan Petroleum Corp (HPCL).
“There are many funding options available. We can look at market borrowings, we have some stocks we can sell,” Chairman and Managing Director D K Sarraf said at a media conference. He also said the acquisition could happen by the end of the current calendar year.
ONGC owns 14 per cent stake in the country’s largest fuel retailer Indian Oil Corporation (IOC) and a 5 per cent stake in state-run natural gas utility GAIL (India) which can be considered, he said. Sarraf added HPCL will remain a separate listed entity even after the completion of the acquisition but will become a subsidiary of ONGC.
Sarraf also said HPCL’s valuation for the deal will be done as per the guidelines of the market regulator Securities and Exchange Board of India (SEBI). The ONGC board had last month given in-principle approval to acquire the government’s 51.11 per cent stake in HPCL.
Prior to the merger, HPCL is likely to take over Mangalore Refinery and Petrochemicals Ltd (MRPL) to bring all the refining assets of ONGC under one unit. ONGC currently owns 71.63 per cent of MRPL while HPCL has 16.96 per cent stake in it. Sarraf said if the boards of both MRPL and HPCL agree to the merger, ONGC will accept the decision.
Sarraf also said ONGC will not have to make an open offer to inority shareholders of HPCL for the deal. Post the acquisition, 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 (RIL). Read more
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