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Govt to transfer HPCL's majority stake to ONGC: Report

The report comes close on the heels of Finance Minister Arun Jaitley's announcement during the budget speech earlier this month 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."

BT Online        Last Updated: February 27, 2017  | 13:09 IST
Govt to transfer HPCL's majority stake to ONGC: Report

India's state-run Oil and Natural Gas Corporation will take control of Hindustan Petroleum Corp (HPCL) as part of the government's plan to create an integrated public sector oil entity comparable with big global oil companies like Shell, BP and Exxon, a report in The Economic Times said.

"It is a very big decision. A Cabinet note will soon be moved. The government of India will transfer its majority shareholding (of 51.11% in HPCL) to ONGC, which will then become the holding company of HPCL," the report quoted an official without identifying.

The move will stop short of a complete merger, which may take longer, but the purpose will be served with this step, the report said citing the same people.

India has about a dozen state-run oil and gas companies - including Indian Oil Corp, Oil and Natural Gas Corp, Hindustan Petroleum Corp. But alone they do not have the financial power to rival global oil majors in bids for overseas oil assets.

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The report comes close on the heels of Finance Minister Arun Jaitley's announcement during the budget speech earlier this month 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." 

Combining them "will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for shareholders," Jaitley had said.

The status of all other oil companies such as Oil India Ltd (OIL) and Indian Oil Corp. (IOC) would remain unchanged.

ONGC's exploration functions will be integrated with HPCL's refining and distribution capabilities. HPCL, which owns and operates two major refineries in Mumbai and Visakhapatnam, has India's largest lubricants unit and second largest pipeline network of 3,015 km apart from a vast marketing system.

 

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