Newdelhi:24/7/17:Hindustan Petroleum Corp Ltd (HPCL) will become India’s third largest oil refiner after state-owned ONGC acquires government’s entire 51.11 per cent stake, Oil Minister Dharmendra Pradhan said on Monday.
HPCL, under which all downstream refining units of ONGC will be accumulated post-merger, will continue to remain a PSU with separate brand and board.
Making a suo motu statement in the Lok Sabha, Pradhan said the Cabinet Committee on Economic Affairs (CCEA) had on July 19 given ‘in-principle’ approval for strategic sale of the government’s existing 51.11 per cent stake in HPCl to Oil and Natural Gas Corp (ONGC) along with transfer of management control.
“The proposed acquisition in the oil sector, will create a vertically integrated public sector 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 to neutralise the impact of global crude oil price volatility,” he said.
The acquisition of HPCL by ONGC will result in significant synergies in terms of optimisation of logistics costs, R&D activities, economies of scale of purchase of crude oil and optimisation in refinery operations.Talking to reporters outside Parliament House, Pradhan said the transaction is targeted to be completed within the current fiscal year ending March 31, 2018.
Pradhan said MRPL will merge into HPCL but did not indicate timelines. “HPCL already has about 17 per cent in MRPL. So there already is synergy there,” he said.
In future, HPCL plans to set up a 9 million ton unit in Rajasthan and plans the expansion of its Vishakhapatnam refinery in Andhra Pradesh. This will take the company to 50 million tons-plus category.