HPCL-ONGC deal: Arun Jaitley panel to oversee divestment, says Dharmendra Pradhan
New Delhi: Oil minister Dharmendra Pradhan on Monday informed Lok Sabha that a panel led by finance minister Arun Jaitley will decide on the modalities of divesting 51.11% of government’s stake in state-run refiner Hindustan Petroleum Corp. Ltd (HPCL) to explorer Oil and Natural Gas Corp. (ONGC) as decided by the government on 19 July.
The cabinet committee on economic affairs (CCEA) last Wednesday approved the sale of the entire government stake in HPCL and transfer of its management control to state-owned ONGC, Pradhan informed the House in a written statement.
The minister said that CCEA also approved an alternative mechanism led by Jaitley to oversee the transaction. It will “help in taking quick decisions with regard to the timing, price, terms and conditions and other related issues to the transaction”, said the statement.
Pradhan also said that even after the deal, HPCL will continue as a central public sector enterprise, as a subsidiary of ONGC. “It (HPCL) can still maintain its cultural uniqueness and brand identity distinct from ONGC,” said the statement.
The transaction will create a vertically integrated state-owned “oil major” having presence across the entire value chain. “This will give ONGC an enhanced capacity to bear higher risks, take higher investment decisions and neutralize the impact of global crude oil volatility,” Pradhan said.
The idea of vertically integrating oil companies was proposed by Jaitley in his 2017-18 budget speech. The ONGC-HPCL deal is the first deal to see progress under this proposal.