Govt to sell its HPCL stake to ONGC for Rs36,900 crore
22 Jan 2018
The government will sell its entire stake in state-run refiner Hindustan Petroleum Corporation Ltd to public sector explorer Oil and Natural Gas Corp (ONGC) for Rs36,900 crore ($5.78 billion), ONGC said today.
ONGC will acquire the 51-per cent central government stake in the refiner at a premium of about 14 per cent to its current market price, the company said in a statement to the stock exchange.
ONGC will pay Rs473.97 per share for HPCL against the closing price for the shares on Friday of Rs416.2. The transaction is expected to be completed by end-January.
The deal is part of the government's objective to combine various public sector enterprises ''to give them the capacity to bear higher risks'' and create more value for shareholders, ONGC said.
While purchasing a stake in India's third biggest state-owned refiner would help ONGC to diversify, it would also help the government meet is divestment target.
India, the world's third biggest oil consumer, has several large and small oil companies, but none of them are on a global scale. India also imports about 80 per cent of its crude needs.
Finance minister Arun Jaitley had said in February last that the country plans to form a national oil major by combining other state-owned firms.
The proceeds from the HPCL stake sale will also help the government meet its divestment target. The government has set a target to raise Rs72,500 crore through the sale of government stakes in various companies.
With the HPCL stake sale, the government's disinvestment receipt will rise to Rs91,252.6 crore, nearly 26 per cent above the targeted Rs72,500 crore.
The higher receipt from disinvestment will help the government stick to its fiscal deficit target of 3.2 per cent of the GDP this financial year, which may see lower collections from the newly introduced Goods and Services Tax.
