ONGC may take over HPCL or BPCL to create integrated firm
22 Feb 2017
The Oil and Natural Gas Corp may take over either Hindustan Petroleum Corporation Ltd or Bharat Petroleum Corporation Ltd if the Centre's idea of an ''integrated oil major'' materialises, reports on Tuesday said.
An official involved with the development said the plan is to transfer the government's holding in one of the companies to ONGC, making the latter the holding company, according to The Hindu. This will enable the creation of an integrated oil major.
The Centre holds 51.11-per cent stake in HPCL, and 54.93 per cent in BPCL.
''The other oil companies - Oil India, in the upstream sector, and Indian Oil Corporation in the downstream sector - will operate unchanged,'' the official added.
The concept of the holding company was first proposed in 2005 by a committee headed by V Krishnamurthy.
The committee, while concluding that the merger of state-run oil companies may not be an advisable option, had suggested two alternatives - creation of a holding company or a coordination body.
According to R S Sharma, former chairman and managing director of ONGC, a holding company concept may work out better.
Sharma, who is also chairman of trade body FICCI's hydrocarbon committee, said creating a holding company will result in optimisation of resource-sharing and upfront cost-savings of 10-15 per cent.
The total market capital of listed oil-sector PSUs is over Rs7,00,000 crore.
The holding-company mechanism will also yield huge disinvestment proceeds to the government, Sharma said, adding that this concept will result in minimum disruption to the existing corporate structure.
