State-owned oil major ONGC has said the preliminary discussion for its acquisition of India’s third-biggest fuel retailer HPCL has started and is going on at the ministerial level.
“The talks are going on at ministerial level. We have not discussed it at the ONGC board. The petroleum ministry wants this to happen because if integration takes place, there will be value creation,” ONGC Director (onshore) Ved Prakash Mahawar told PTI here.
Asked about reports on valuation of the deal between ONGC and Hindustan Petroleum Corporation Ltd (HPCL), he said: “These are only guesses. So far, no discussion has taken place at our board meeting.”
Mahawar stressed that merger and acquisitions are strategic decisions of the company and the talks for acquiring HPCL are at a preliminary stage at present.
Asked specifically if any proposal has been prepared to discuss the issue by the ONGC Board, he said: “We have not talked about it yet.”
According to Mahawar, the government wants that ONGC and HPCL should merge as this will give value to the shareholders.
“We have MRPL (Mangalore Refinery and Petrochemicals Ltd), which does not have retail outlets. If we do a vertical integration of HPCL, then we will take MRPL’s products to retail outlets. We will get the margin of retail outlets as well which we are not getting now,” the director said.
Last month, a source had said India’s biggest oil and gas producer ONGC may buy all of the government’s 51.11 per cent stake in HPCL, which will have to be followed by an open offer to acquire additional 26 per cent from other shareholders of the retailer.
HPCL will add 23.8 million tonnes of annual oil refining capacity to ONGC’s portfolio, making it the third-largest refiner in the country after IOC and Reliance Industries.
ONGC already is majority owner of MRPL, which has a 15 million tonne refinery.
The merger is likely to help the world’s third-largest oil consumer better compete with global majors in acquiring foreign assets.