HPCL mulls acquisition of 2 ONGC subsidiaries before takeover

24-Jul-17

State-run Hindustan Petroleum Corp (HPCL) is mulling acquisition of two subsidiaries of Oil and Natural Gas Corp (ONGC) before the takeover. The two ONGC units are Mangalore Refinery and Petrochemicals (MRPL) and ONGC Petro Additions (OPaL). This move is to consolidate all of ONGC’s downstream operations in HPCL, leaving it free to focus on exploration and production. HPCL will look after refining and marketing.

HPCL already has a 16.96% stake in MRPL, in which ONGC holds 71.63%. ONGC has a 49.36% stake in OPaL with GAIL holding 49.21%. The government has already begun the process of appointing transaction advisors for the ONGC-HPCL deal and will seek an independent valuation of its stake in the refiner. The government currently holds a 51.1 % stake in HPCL. Earlier this week, the Cabinet Committee on Economic Affairs (CCEA) accorded “inprinciple approval” for the strategic sale of its stake, “along with transfer of management control” to ONGC. HPCL will become a subsidiary of ONGC once this deal takes place.