India's cabinet has approved a plan to sell its entire 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), and aims to finalize the deal by the end of the current Indian financial year through March 2018, Oil Minister Dharmendra Pradhan said on Monday.
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.
Speaking to ET Now on Monday, the minister said that it was too early to speculate on a price of the deal. The stake sale is reportedly valued at around US$4.6 billion.
India has decided to create a panel led by finance minister Jaitley to speed up the ONGC-HPCL merger process, Pradhan has said to lawmakers.
That panel "will help in taking quick decision with regard to the timing, price, terms and conditions and other related issues to the transaction," Reuters quoting Pradhan as telling lawmakers in a statement.
According to Pradhan, there will be significant synergies and enhanced capacity from the sale of HPCL stake to ONGC, and HPCL can maintain its brand identity post-stake sale to ONGC.
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Just last week, reports emerged that India's top refiner Indian Oil Corporation (IOC) may buy out the government's 66-percent stake in exploration company Oil India, in a second deal involving oil firms that is part of India's plan to create a giant integrated oil company.
Today, minister Pradhan said that after the ONGC-HPCL deal, the government will be looking at its capacity and energy requirements to see what other oil firms it could integrate.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More