ONGC Plans To Acquire 51.11% Stake In HPCL From Government of India

Published: Jul 12 2017
Deal Summary

Oil and Natural Gas Corporation Ltd. (ONGC), an oil and gas company, intends to acquire Government of India’s (GoI) 51.11% stake in Hindustan Petroleum Corporation Limited (HPCL), a downstream energy company.

Earlier, on February 27, 2017, ONGC intends to acquire GoI’s 51.11% stake in HPCL, reported by the Economic Times daily. According to Bloomberg, the transaction is estimated to be valued at approximately US$4,400 million (MM).

HPCL owns and operates two major refineries located in Mumbai and Visakhapatnam, India, with a capacity of 6.5 million metric tonnes per annum (mmtpa) and 8.3 mmtpa, respectively. The company also owns and operates the Lube Refinery in India, producing Lube base oils of international standards, with a capacity of 428,000 metric tonnes.

In addition to the transaction, ONGC may acquire additional 26% stake in HPCL for approximately US$2,200 MM, through an open offer, according to the sources.

The transaction will enable ONGC to strengthen its business operations. The sale is a part of the GoI’s plan to create an integrated public sector oil entity.

The transaction is expected to be completed by end of fiscal year 2018.

Dharmendra Pradhan, Minister of State for Petroleum and Natural Gas, said, “The proposed acquisition in the oil sector will create a vertically integrated public sector oil major company having presence across the entire value chain. This will give ONGC an enhanced capacity to bear higher risks, take higher investment decisions and to neutralise impact of global crude oil price volatility.”

Deal history

Update 3: On August 21, 2017, ONGC received principle approval from its board of directors for the acquisition of GoI’s share in HPCL.

Update 2: On July 24, 2017, ONGC received principle approval from Cabinet Committee on Economic Affairs for the acquisition of GoI’s share in HPCL.

Update 1: On July 19, 2017, ONGC received approval from the union cabinet headed by prime minister for the acquisition of GoI’s share in HPCL.

Planned: On July 12, 2017, ONGC intends to acquire GoI’s 51.11% stake in HPCL.

Rumor: On February 27, 2017, ONGC intends to acquire GoI’s 51.11% stake in HPCL, reported by the Economic Times daily.

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