The government seems to be wasting no time in its quest to create huge energy PSUs of global scale, as, while a deal for ONGC’s proposed takeover of HPCL is yet to be finalised, the Centre has already embarked on its next ambitious project: combining the behemoth refiner and marketer Indian Oil Corp and smaller oil exploration firm Oil India Ltd, according to a TV news report.
The government is of the view that Indian Oil Corp must buy out its equity stake in Oil India Ltd this fiscal year itself, following ONGC’s acquisition of HPCL, ET Now reported on Monday citing unidentified sources. The government owns 66% equity stake in Oil India. The proposed merger of Indian Oil and Oil India is part of the government’s plan to create mega oil PSUs of global scale, with vertically integrated functions across upstream and downstream.
The proposal seems to be in early stages, with there being no decision yet on whether the merger would be all cash, or all stock, or a mix of both, the news report said. Further, the timing of a merger between Indian Oil and Oil India is also yet to be identified, and there are varying views within the government on it, ET Now report said.
Meanwhile, with regard to the first deal, the Department of Disinvestment is learned to have already issued a Cabinet note on the proposed amalgamation of the state-run refiner Hindustan Petroleum Corp Ltd with the giant oil explorer Oil and Natural Gas Corp. As is widely known, the government is planning to combine HPCL with ONGC by December this year by selling its 51.1% stake in the former to the latter.
Further, the government is also reportedly considering forming a Group of Ministers (GoM) to frame guidelines, price and timeframe for the share sale. Finance Minister Arun Jaitley, road minister Nitin Gadkari, oil minister Dharmendra Pradhan and power minister Piyush Goyal will likely be part of the proposed GoM.
Vertically integrated oil companies would be better able to absorb the fluctuations in the global crude oil prices, as when the exploration unit will suffer from falling prices, the refining unit will benefit, and vice versa. Earlier in February, Finance Minister Arun Jaitley proposed setting up an integrated oil PSU (public sector undertaking) by merging companies with synergy in order to match the scale of the global oil giants.
Source Link – The Financial Express
Latest posts by The Financial Express (see all)
- ONGC Gets A Big Challenge From PM Narendra Modi. This Will Impact Your Life Too – September 26, 2017
- Big Setback For Delhi Metro Passengers; This Is The Big Punishing Step DMRC Is Set To Take From October 3 – September 26, 2017
- Narendra Modi Varanasi Visit Day 2 Live Updates: PM Says Country Is Bigger Than Party, Aims To Double Farmers’ Income By 2022 – September 23, 2017