Hindustan Petroleum Corp Ltd (HPCL) is set to become India’s third-largest oil refiner after state-owned ONGC acquires government’s entire 51 per cent stake in the company, the oil minister said.
Dharmendra Pradhan told parliament that HPCL, which will absorb all of ONGC’s downstream refining units after the merger will remain a separate state-owned firm with an independent board.
The Indian cabinet approved the merger on July 19.
“The proposed acquisition in the oil sector will create a vertically integrated public sector oil major 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 the impact of global crude oil price volatility,” Pradhan said.
The government is keen to bring synergies among the various state-owned oil firms.
Pradhan later said said the transaction was targeted to be completed within the current fiscal year ending March 31, 2018.
HPCL currently has 24.8 million tons per annum of refining capacity. Mangalore Refinery and Petrochemicals Ltd – a subsidiary of ONGC — has 15.1 million tons. After this deal, the entire refining capacity of ONGC Group will come under HPCL.
“So, HPCL will have 40 million tons of refining capacity and will be third largest in the country after Indian Oil Corp which has 69.2 million tons capacity and Reliance Industries which has 62 million tons,” the minister said.
HPCL plans to set up a 9 million ton unit in Rajasthan and plans to also expand its Vishakhapatnam refinery, taking its refining capacity to beyond 50 million tons.