Source: Business Standard, July 20, 2017
The Union Cabinet has approved the plan to sell the government’s 51 per cent stake in state-refiner HPCL to explorer ONGC.
For the government and economy, this move has multiple benefits. This single deal alone would fetch about 41 per cent of the total divestment target of Rs 72,500 crore, assuming that the deal happens at HPCL’s current market cap of Rs 58,500 crore. Though the management control would stay with the government through ONGC, in which it holds a 68.07 per cent stake, technically, the government’s hold over HPCL would be reduced from 51.11 per cent to 35 per cent (68.07% of 51.11%) effectively.
This consolidation could facilitate mega-refinery projects in the country – joining hands for mega oil & gas projects becomes a time-consuming process for independent entities. There were a few mega-project proposals jointly announced by independent PSUs in the past but most of them never took off. This move also paves the way for more consolidations and stake sales in the oil & gas sector.