The board of Indian oil marketing company Oil and Natural Gas (ONGC) has given an ‘in-principle’ approval to acquire 51.11% stake held by the government in Hindustan Petroleum (HPCL).
The development follows the government’s nod to the sale of its stake in HPCL last month.
Once the deal is completed, ONGC is expected to boost its refining portfolio with the addition of HPCL’s 23.8 million tonnes of oil refining capacity per annum, according to the Press Trust of India (PTI).
In the annual budget presented this year, the government declared its plans to merge different state-owned firms to create an integrated oil entity, which, it believes, will be able to compete with international players.
Following the merger, HPCL will become a subsidiary of ONGC and continue to operate as a listed company.
In an attempt to bring all the refining assets of ONGC under one umbrella, HPCL is expected to take over Mangalore Refinery and Petrochemicals (MRPL).
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By GlobalDataONGC currently owns 71.63% stake in MRPL and HPCL holds 16.96% stake, the news agency reported.
ONGC noted that a committee of directors has been appointed to go through the modalities of the acquisition proposal and submit recommendations to its board of director.
In its annual report for the financial year 2016, ONGC declared that it produced 22.36mt oil, while gas production was recorded at 21.18bcm.
