State-owned India's leading oil major Hindustan Petroleum Corporation Ltd (HPCL) has made firm plans for investment of Rs 7110 Crore for business growth in the current fiscal.
The company, which is being merged with exploration giant ONGC, has also planned capex of Rs 61,000 crore for capacity expansion over the next five years.
While the capex stood at Rs 5860 crore in the last fiscal, it is expected to be Rs 7110 crore this financial year.
"With a huge potential of growth amidst rising energy demand and due to low per capita consumption base, the oil and gas sector is poised for an exciting and challenging future," HPCL chairman and managing director M K Surana said at the company's annual general meeting.
"We are adapting to this changing energy mix and are well positioned to create value for all the stake-holders in the future with a capex of over Rs 61,000 crore over the next five years," he added.
On ONGC acquiring HPCL, Surana said the government has formed an advisory panel which would decide the valuation (share price) for acquisition.
Union Finance Minister Arun Jaitley is heading the three-member ministerial panel to oversee and expedite the sale of the government stake in oil refiner HPCL to explorer ONGC for around Rs 35,000 crore.
On HPCL taking over MRPL post-acquisition by ONGC, Surana said a discussion on the issue has not taken place yet but "it is a reasonable possibility that MRPL will go along with HPCL".
Earlier in the day, Surana informed investors that "the focus (of ONGC acquiring HPCL) is to introduce new technologies, create a vibrant and investor friendly upstream sector for production of oil and gas, transform country into a refining and petrochemical hub, create a national natural gas grid, move to a market driven pricing, leverage technology for reducing costs, introduce innovative payment solutions and transition the country to a low carbon economy".
Hindustan Petroleum Corporation will remain a public sector unit with a separate board and brand identity post ONGC acquiring government's entire 51.11 per cent stake, which at current prices is valued at about Rs 28,800 crore.
Post-merger, all refining units of ONGC will be accumulated under HPCL, making it the third largest oil refiner after Indian Oil Corporation (IOC) and Reliance Industries, Pradhan had said while announcing the merger some months ago.
ONGC owns 71.63 percent of MRPL, a company it had acquired from AV Birla Group in March 2013.
HPCL plans to set up a 9 million tonne unit in Rajasthan as well as expand its Vishakhapatnam refinery. This will take the company to 50 million tonnes-plus category.
The Cabinet on July 19 approved sale of government's stake in HPCL to the largest oil producer ONGC for Rs 30,000 crore.
HPCL will become a subsidiary of ONGC and will remain a listed company post the acquisition and board of the refining and marketing company will continue to remain in place.
The government had recently approved sale of its 51.11 percent stake in oil refiner HPCL to India's largest oil producer ONGC.
HPCL owns and operates two major refineries producing a wide variety of petroleum fuels and specialities, one in Mumbai (West Coast) of 7.5 million tonnes per annum (MMTPA) capacity and the other in Visakhapatnam (East Coast) with a capacity of 8.3 MMTPA.
HPCL also owns and operates the largest lube refinery in the country producing lube base oils of international standards, with a capacity of 428 TMT. This Lube Refinery accounts for over 40 per cent of the India's total lube base oil production.
Surana also said the company has signed a revised MoU and a joint venture agreement with Rajasthan for setting up 9 MMTPA refinery cum petrochemical complex at Barner at a cost of Rs 43,129 crore. HPCL will hold 74 percent stake while the Rajasthan government will hold the rest.