India's government plans to sell its entire more than 50-percent stake in one of the largest local refiners, Bharat Petroleum Corporation (BPCL), most likely to state-controlled Indian Oil Corporation, Indian outlet Business Standard reported on Monday.
A possible merger between BPCL and IOCL would be the third major deal of combining state-held enterprises over the past three years, excluding mergers in the banking sector, Business Standard says.
If the deal succeeds, a BPCL and IOCL merger would follow the merger between the Oil and Natural Gas Corporation (ONGC) and Hindustan Petroleum Corporation (HPCL) in 2017-2018 and the REC-Power Finance Corporation (PFC) deal in 2018-2019.
In the summer of 2017, India's cabinet 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). After the ONGC-HPCL deal, the government was planning on looking at its capacity and energy requirements to see what other oil firms it could integrate, Oil Minister Dharmendra Pradhan said in July 2017.
Two years later, in its second term in office now, the government of Prime Minister Narendra Modi is looking to book proceeds from divestments of stakes in state-held firms in order to curb budget deficit.
India's government is considering relinquishing direct control over some of the biggest energy firms, although the indirect state participation will remain at above 51 percent, Atanu Chakraborty, who is responsible for the asset sale department at the government, told Bloomberg in July. The likely candidates for the government cutting its direct stake to below 51 percent could be Oil and Natural Gas Corp, Indian Oil Corp, NTPC Ltd, and GAIL India Ltd, Chakraborty told Bloomberg.
Oil Minister Pradhan, for his part, said in early July that there wasn't any proposal for a merger of state-owned oil and gas firms currently under review at the ministry.
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