The transaction was reported by Press Trust of India to be worth INR300bn ($4.7bn) and is part of the government’s strategy to form an integrated public sector oil entity through the merger of HPCL into ONGC.
A statement from ONGC read: “We hereby inform that the Board of Directors at the meeting held on today (21st August, 2017) at New Delhi considered the proposal for acquisition of 51.11% of share of HPCL (Hindustan Petroleum Corporation Limited) from the Government of India and given the 'in principle approval' for the same.”
ONGC did not have to make an open offer to take over the oil and natural gas company as the transaction involves transfer of the government’s stake between two state-operated companies with the ownership remaining unchanged.
The oil and gas exploration company said that it has formed a committee of directors to study various aspects of the proposal and to table recommendations to its board of director.
Through the acquisition, ONGC will be adding about 23.8 million metric tons per annum (MMTPA) oil refining capacity from HPCL to its portfolio.
HPCL owns and operates two major refineries in Mumbai and Visakhapatnam. While the Mumbai oil refinery has a capacity of 6.5MMTPA, the Vizag oil refinery has a capacity of 8.3MMTPA.
HPCL’s acquisition is expected to list ONGC among the largest Indian refiners after Indian Oil Corporation (IOC) and Reliance Industries while enabling it to compete on the global front against oil giants when it comes to pursuing of foreign assets.
Image: HPCL’s oil refinery in Visakhapatnam, India. Photo: courtesy of IM3847 at English Wikipedia.
