28
Tuesday
February 2017
10:15 PM IST
News Headlines
Home   | Main News   | International  | National   | Business   | Sports   | Special News   | Feature News   | Entertainment   | About Deepika 
BUSINESS NEWS
ONGC may acquire HPCL in Rs 44,000-cr deal
 
(New Delhi, Feb,27,2017):Stateowned Oil and Natural Gas Corporation (ONGC) may acquire India's thirdbiggest fuel retailer HPCL in an about Rs 44,000 crore ($6.6 billion) deal as part of the government's plan to create an integrated oil giant.

Following up on Finance Minister Arun Jaitley's Budget announcement of creating an integrated oil company, India's biggest oil and gas producer ONGC may buy all of the government's 51.11 per cent stake in Hindustan Petroleum Corporation Ltd (HPCL).


This will have to be followed by an open offer to acquire additional 26 per cent from other shareholders of HPCL.

"The government is looking at creating an integrated oil company and the idea is to merge an oil producer with a refiner," a top source said.

There are only six major companies in the sector ONGC and Oil India Ltd being the oil producers, Indian Oil Corp (IOC), HPCL and Bharat Petroleum Corp Ltd (BPCL) in refinery business and GAIL in midstream gas transportation business.

The rest such as ONGC Videsh, Chennai Petroleum Corp (CPCL), Numaligarh Refinery Ltd and Mangalore Refinery (MRPL) are already subsidiaries of one of these six PSUs.

"So, the options are very limited. One option is to merge refiners HPCL and BPCL with ONGC and merge IOC and OIL. Now this would create two large vertically integrated oil companies. But this would also mean limiting the choice for consumers to just two companies for buying fuel," he said.

The possible way out is to merge HPCL with ONGC while keeping BPCL separate. BPCL already has a flourishing upstream arm in Bharat PetroResources Ltd which can be strengthened further.

"This way consumers will continue to have three fuel retailers in IOC, ONGCHPCL combine and BPCL," he said.

HPCL will add 23.8 million tonnes of annual oil refining capacity to ONGC's portfolio, making it the thirdlargest refiner in the country after IOC and Reliance Industries.

ONGC already is majority owner of MRPL, which has a 15mt refinery.

The source said ONGC buying HPCL will require two sets of Cabinet approval one where the government approves sale of its all or part of its 51.11 per cent stake to ONGC, and the other for allowing ONGC to spend the money on stake buy.

Considering today's trading price of Rs 561, ONGC will have to pay the government Rs 29,128 crore for 51.11 per cent stake. It will then have to buy another 26 per cent from the open market for Rs 14,817 crore, taking the total acquisition price to about Rs 44,000 crore.

The merger will help the world's thirdlargest oil consumer better compete with global majors in acquiring foreign assets.

More than 12 years after a proposal to merge oil PSUs was first mooted by the then oil minister Mani Shankar Aiyar, Jaitley in his Budget for 201718 proposed to "create an integrated public sector 'oil major' which will be able to match the performance of international and domestic private sector oil and gas companies".

The behemoth so created will not just compete globally, but withstand oil price volatility by using profits the refining business make in low oil prices to make up for losses in upstream and vice versa.


CCI rejects complaint against Great Eastern Energy Corp
India to be fastest growing economy among G-20 nations:Moody's
Five associate banks to merge with SBI from April 1
Snapdeal to lay off 600 employees, founders take 100% salary cut
IndiGo-SilkAir planes on midair collision course; govt launches probe
'15,000 Pak military personnel protecting CPEC'
Took Rs 100 cr hit on account of DeMo: Nestle
Google, Microsoft agree to crackdown on piracy sites
It's important one grows a thick skin fast, says RBI Governor Urjit Patel
South Indian Bank awarded ISO 27001: 2013certification
200 villages use e-cash on Airtel’s bank
Zoom Air, new Indian airline to start commercial operations from Feb 15
Fake currency smuggling halted post note ban: FinMin to PAC
Tata Motors launches truck "Prima" in Saudi Arabia
Air India likely to induct 34 planes in two years
Toyota, Suzuki courtship intensifies as partnership talks begin
Kerala's 'Responsible Tourism' initiative a role model, says UNWTO
CBDT identifies 18 L people with suspicious deposits
"India should reduce dependency on fossil fuels"
Voda, Idea in talks to create India's largest telco
ENTERTAINMENT
"Frustrated netizens criticize senior film makers like me"
 Veteran Malayalam film maker Sathyan Anthikkad had to endure harsh criticisms from online platforms following the release of his latest movie 'Jomonte Suvisheshangal'.  
Renji Panicker delighted over the success of 'Raees'
Jackie unbeatable, never tired: Sonu Sood
Hrithik Roshan inspired by 'Raees'
FEATURE NEWS
Mundrothuruthu: A Disappearing Fertile Island
 Mundrothuruthu is an island Village in Chittumala Taluk in Kollam District of Kerala State, India. It is today a village now on the verge of sinking, getting swallowed by water and disappearing from the face of the earth.
Pregnant women constrained to give birth on public road sides
Infants deprived of life due to feeble health of mothers
Wailing songs of death pervade Attappady
SPECIAL NEWS
Cool-headed duck becomes latest Internet sensation !
 Tigers are fierce animals. But, a tiger of Australia's Symbio Wildlife Park had to give up all his efforts to get hold of a duck.
Kalolsavam 2017: Manju steals the limelight
A sparkling gem of an artist
7 steps to beat childhood obesity
Rashtra Deepika LTD
Copyright @ 2017 , Rashtra Deepika Ltd.