New Delhi, July 7: The Union Cabinet is all set to take a decision with respect to the possible merger of state-run oil processing bodies, Hindustan Petroleum (HPCL) and Oil and Natural Gas Corporation (ONGC). The decision is expected to be announced before August 2017.
While a final decision is expected to be arrived at soon, the actual merger itself will likely take an extensive amount of time and could even extend up to one year. The slow pace of the process is reported to have irked the Prime Minister’s Office.
One of the major reasons behind the government’s keenness to see the merger of HPCL and ONGC through is a desire to bring in a Public Sector Undertaking that is on a global scale. Such a vertically integrated oil refinery will also help in absorbing the volatilities of global crude oil prices. A Group of Ministers is expected to be formed that will be responsible deciding upon the finer points of the merger.
This would include the various guidelines, prices and the approximate guidelines to be followed. Key cabinet ministers including Nitin Gadkari and Arun Jaitley are likely to be a part of the Group of Ministers. If the guidelines are decided upon and the cabinet agrees to the merger, 51 per cent shares of the HPCL would be taken over by the ONGC.
Commenting on the time the Cabinet might take to finalise on the merge, a governmental source was quoted by PTI as having said, ” It may come before the cabinet as early as 10 to 15 days.” However, reports also suggest that the Ministry of Petroleum and Natural Gas would prefer the adoption of a subsidiary role for HPCL instead of a complete merger.
A 51.1 per cent stake in HPCL is worth over $4.5 billion or Rs 29,000 crore. The possible merger is being overseen by the Department of investment and public asset management (DIPAM). The department has a disinvestment target of Rs 72,500 crore for the current financial year.