In a bid to create an oil behemoth that could take on global giants like Shell BP and Exxon, Centre is planning to transfer the ownership of Hindustan Petroleums (HPCL) to Oil and Natural Gas Corp (ONGC). If the deal goes through, ONGC may buy the government’s complete 51.11% holding. The move will make ONGC, the parent company of HPCL.
This will be followed up with an open offer to acquire additional 26 percent from other shareholders of HPCL. According to PTI, sources said HPCL would add 23.8 million tonnes of oil refining capacity to ONGC, making the merged entity the third largest refiner in the country after Indian Oil Corporation and Reliance Industries Limited.
“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 percent in HPCL) to ONGC, which will then become the holding company of HPCL,” Economic Times wrote citing one of the officials.
Earlier in his budget speech on February 1, Finance Minister Arun Jailey had said that India is planning to create a giant oil company by combining state-owned firms.
The move is likely to reduce risk-high crude oil prices, will boost the exploration business and when they drop, the distribution segment will benefit.
Being the third largest oil consumer in the world, India needs to compete well with global giants like Exxon,Shell BP etc.