ONGC buys GoI's 51.11% stake in HPCL for Rs 36915 crore

The proceeds from the HPCL stake sale will also help the federal government pay for welfare programmes. We have some liquid assets also (cross-holding in other state-owned companies). "Whenever crude oil prices go up - the bottomlines and the toplines - of companies like ONGC improve and that of refiners like HPCL get impacted", Shanker said when asked about the synergies that the acquisition is expected to bring.

The deal will help the Centre exceed its Rs. 72,500-crore sell-off target even as the year's fiscal deficit target was breached in the first eight months of the year.

The government's 51.11 percent shares will be sold at a consideration of Rs. 36,915 crores, the Ministry of Finance confirmed.

With its stake sale in HPCL, the government's disinvestment receipt will work out to be Rs 91,252.6 crore.

In line with the finance minister's budget announcement, ONGC proposed to acquire the government's existing 51.11 per cent equity shareholding in HPCL.

In July 2017, the Cabinet Committee on Economic Affairs had given the in-principle approval and the alternate mechanism set up for the finalising the price, terms and conditions of the transaction.

The ministry reasoned the merger to the February 2016 review called by Prime Minister Narendra Modi where he "underlined the need of efficient management of government investments in central public sector enterprises (CPSEs)".

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Through this acquisition, ONGC will become India's first vertically integrated "oil major", having presence across the entire value chain.

"In this process, ONGC has acquired significant mid-stream and downstream capacity and will attain economies of scale at various levels of operations", the statement added.

In the Union Budget presented on February 1 past year, finance minister Arun Jaitley had set the target of disinvestment in public sector units at Rs 72,500 crore.

According to CNBC TV18, the government has now revised its disinvestment target for FY18 to around Rs 92,000 crore.

He disclosed that the company's Board has approved a hike in the borrowing limit to Rs 35,000 crore, from Rs 25,000 crore, and that ONGC has also received loan offers worth Rs 50,000 crore at attractive rates.

State-owned explorer Oil and Natural Gas Corp.

He said HPCL markets around 35.2 million tonnes of petroleum products while it has an oil refining capacity of 17-18 million tonnes, excluding 11.2 million tonnes joint venture Bhatinda refinery.