Africa’s second gold producer Ghana…
A major change in oil…
India’s government plans to sell by the end of this year its 51.1 percent stake in the third-largest local refiner Hindustan Petroleum Corp (HPCL) to the country’s biggest explorer, state-held Oil and Natural Gas Corporation (ONGC), in a deal valued at around US$4.5 billion, Bloomberg reported on Thursday, citing people with knowledge of the transaction.
The stake sale is part of India’s plan to create a state-held oil giant.
In early February this year, India’s Minister for Finance and Corporate Affairs, Shri Arun Jaitley, said in the presentation of the 2017/18 budget in Parliament that the country was planning to create an integrated public-sector oil major to match the performance of huge international private sector oil and gas companies.
ONGC will take majority control of HPCL as part of the government’s plan to create an oil major capable of competing with Big Oil, Indian media reported at the end of February.
Now Bloomberg’s sources say that the Indian oil ministry was in favor of making HPCL a unit of ONGC rather than merging the companies. The final form of the proposed transaction will be decided in a few months, according to the people who spoke to Bloomberg.
Based on Wednesday’s closing price, the 51.1-percent stake in HPCL is worth nearly US$4.5 billion, the equivalent of 287.7 billion Indian rupees, which will help India to meet 40 percent of its targeted proceeds from asset sales by the end of the financial year to March 2018.
India’s plan to merge some state-held oil enterprises could reduce inefficiencies in the sector, Fitch Ratings said in February, shortly after the initial project was announced. An oil major would also be in a better position to compete for resources globally and withstand oil price volatility. On the downside, Fitch sees the plan as likely reducing competition on the domestic market, and facing challenges in the actual executions of the mergers.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…