New Delhi: The government is close to finalizing the structure of a deal in which Oil and Natural Gas Corp. Ltd (ONGC) will acquire 51.1% stake in Hindustan Petroleum Corp. Ltd (HPCL). Cabinet approval for the deal is expected in a few weeks.

“The petroleum ministry has given its proposal in a sealed envelope for the cabinet’s consideration," said a government official, who asked not to be named. The proposal is taken forward by the department of investment and public asset management (DIPAM), which has a disinvestment target of Rs72,500 crore this year.

ONGC’s acquisition of a majority stake in HPCL could fetch the exchequer Rs26,400 crore as per Thursday’s closing prices on BSE. ONGC officials declined to comment.

News agency PTI said, quoting an anonymous government source, “It may come before the cabinet as early as 10 to 15 days." A cabinet clearance only means that the promoters of both ONGC and HPCL have given their nod. The boards of the companies too have to approve the transaction, and further they have to seek approval from all shareholders before seeking a high court endorsement for the transaction to conclude.

A proposal to integrate the two state-owned oil firms to achieve scale to compete with global companies for hydrocarbon assets in world markets was announced by finance minister Arun Jaitley in the 2017-18 budget. Although the merger of several oil companies was initially considered, the government finally opted for ONGC’s acquisition of HPCL, considering the need to find resources for welfare schemes.

ONGC, which has announced heavy investments in its deepwater block in the Krishna Godavari basin, may have to borrow if it has to buy a majority stake in HPCL. It has cash reserves of about Rs13,000 crore.

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