The Cabinet Committee on Economic Affairs (CCEA) has given in-principle approval for the sale of the government’s 51.11 per cent stake along with the management control of HPCL to the ONGC, according to Oil Minister Dharmendra Pradhan said.
Hindustan Petroleum Corporation Ltd (HPCL) will continue as a public sector undertaking after Oil and Natural Gas Corporation Ltd (ONGC) acquires its stake, the minister said in the Lok Sabha.
“The proposed acquisition in the oil sector will create a vertically integrated public sector oil major company 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 impact of global crude oil price volatility,” Pradhan said.
But the state-run HPCL may also acquire two subsidiaries of ONGC before the explorer takes over the refiner, a senior government official said. The two ONGC units are Mangalore Refinery and Petrochemicals (MRPL) and ONGC Petro Additions (OPaL).
Such a move would 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, according to this line of reasoning.