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Ministry of Finance and Oil & Petroleum Ministry have almost agreed to have state-run Oil and Natural Gas Corp (ONGC) pay a 40%-50% premium for buying a 51% equity stake in Hindustan Petroleum Corp Limited (HPCL) from the government.
According to published media report in Financial Express, the government seems to be eyeing not only long term strategic benefits, but also an immediate cash bonanza from its ambitious plan to create a giant energy company of the global scale, by asking oil producer ONGC to pay 40%-50% premium for the proposed takeover of a majority stake in refiner and marketer HPCL from it, raking in about Rs 50,000 crore. HPCL shares jumped on the news, rising 4.2% to Rs 356.25.
In order to fund the buyout of HPCL, ONGC will likely sell its 14% equity stake held in another state-run giant oil refiner Indian Oil Corp in block deals, adding that ONGC’s 14% stake in IOC is valued at Rs 30,000 crore today. Indian Oil Corp’s shares also rose on the news, and were trading up 1.5% at Rs 393, while ONGC shares rose 1.6% to Rs 163.
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