ONGC to acquire government's shares in HPCL

New Delhi [India], Jan 20 (ANI): The Government of India on Saturday entered into an agreement with the Oil and Natural Gas Corporation (ONGC) for the strategic sale of its equity share-holding in Hindustan Petroleum Corporation Limited (HPCL).

The government's 51.11 percent shares will be sold at a consideration of Rs. 36,915 crores, the Ministry of Finance confirmed.

In this process, ONGC has acquired significant mid-stream and downstream capacity and will attain economies of scale at various levels of operations.

During the review in February 2016, Prime Minister Narendra Modi had underlined the need for efficient management of government investments in Central Public Sector Enterprises (CPSEs).

The Centre accordingly expanded the approach from that of disinvestment to investment and public asset management.

As part of its investment management strategy, the government decided to explore possibilities of consolidation, mergers and acquisitions within the CPSE space. An announcement in this regard was also made by Finance Minister Arun Jaitley in his Budget Speech of 2017-18.

In line with this, the ONGC, therefore, proposed to acquire the government's existing 51.11 percent equity shareholding in HPCL.

Further to this, the Union Cabinet, in its meeting held in July gave 'in-principle' approval to the said proposal and decided to set-up an alternative mechanism under the ministry to decide on the price, timing and the terms and conditions of the strategic sale.

The alternative mechanism under the chairmanship of the finance minister in its meeting today thereby approved the price bid of ONGC and the terms and conditions of the sale.

Through this acquisition, ONGC will become India's first vertically integrated 'oil major' company, having presence across the entire value chain.

The integrated entity will have advantage of having enhanced capacity to bear higher risks and take higher investment decisions. (ANI)

This story has not been edited. It has been published as provided by ANI