ONGC merger with HPCL

By Shruti Barar

With the motive of becoming a mega oil company in the country that could compete with the likes of Aramco of Saudi Arabia and Petro China and Sinopec, India's largest oil producing company Oil and Natural Gas Corporation (ONGC) decided to acquire India's third largest fuel retailer HPCL in a deal estimated to be around Rs 44000 crore. The talks went to the ministerial level, on which the director, Ved Prakash Mahawar commented that ministry wants this to happen because if integration takes place there will be value creation. It was estimated that HPCL will add 23.8 million tonnes of annual oil refining capacity to ONGC's portfolio making it the third largest refiner in the country after IOC and Reliance Industries.

On July 12 , there was a spike in  oil stocks due to the reports regarding ONGC and HPCL merger by the end of this fiscal year. Also, the oil minister, Dharmendra Pradhan confirmed that it would be completed by 2017-18. 

The stocks rose by almost 3 percent for both ONGC and HPCL. ONGC stock advanced 2.96 percent to Rs 164.75 on BSE. It opened at Rs 296 and touched an intraday high and low of Rs 296 and Rs 290.50 respectively. Shares of HPCL gained 2.65 percent to Rs 351. Other stocks like IOC and BPCL also gained.

It was reported that Cabinet is likely to consider this month sale of government's 51 percent stake in HPCL to ONGC for over Rs 26000 crore in the month of July.

According to the report , DIPAM in Ministry of finance was moving a note of consideration of the cabinet for divesting government's entire 51.11 percent shareholding in HPCL to ONGC.

Since the entities are getting stronger by merging so there was a spike in the stock of the oil companies,making the oil industry more dominant than their likes in the world.