Cabinet may give in-principle nod for acquisition of govt stake in HPCL by ONGC

Cabinet today may consider giving an in-principle approval for acquisition of government shareholding in HPCL by ONGC, reports CNBC-TV18’s Sapna Das, adding that HPCL will continue to remain listed as subsidiary of ONGC.

Meanwhile, with regards to the Budget announcement in terms of consolidation and integration in the oil sector, it could also be a logical possibility, at a later stage that HPCL may be open for an acquisition of MRPL but is not a part of the in-principle nod which might come in by the cabinet today in terms of ONGC and HPCL.

Discussing on the above development, Narendra Taneja, National Convener - Energy Cell, Bharatiya Janata Party said the above could just be an exercise where the oil minister has officially informed to the parliament to keep it in the loop, because parliament is the supreme body.

The government will now take it to the cabinet, which is the next step, said Taneja, cautioning that just because this is on the agenda does not necessarily mean it will be pushed through by the cabinet. All that depends on the number of issues cabinet takes on a particular day.

However, it looks like this will be taken up and once it is approved by the cabinet then other ministries involved- including ministry of law, ministry of company affairs etc.

Talking about other developments like whether MRPL will be first merged with HPCL then HPCL with ONGC, Taneja said these decisions will likely be taken by the respective boards of the companies and the government may not get too involved in these issues.

Sanjiv Bhasin, IIFL says it is good that such fast decisions are being taken and underlying fact remains that it would be a good long-term measure although in the short-term it may be a bit of a dampener on the cash reserves.

However, the government wants to sell its stake because it wants cash on its balance sheet, said Bhasin, adding that in the longer term it will be a good amalgamation of upstream and downstream oil marketing companies which will give them huge amount of base capital and rollover borrowing cost in the long run.