NEW DELHI: Paving the way for mega mergers in the oil & gas sector, the Ministry of Corporate Affairs announced on Thursday that mergers and acquisition deals involving public-sector oil & gas companies have been exempted from requiring mandatory approvals from the Competition Commission of India (CCI).
The changes to existing rules were made through a notification from the MCA, removing legal and procedural obstacles in merging and consolidating state-owned oil and gas firms -- a key proposal of the current government at the centre.
According to the notification, all cases of combinations involving the central public sector enterprises (CPSEs) operating in the oil & gas sector under the Petroleum Act, 1934 have been exempted from the CCI approval requirement for five years. The exemption will also be applicable to their “wholly- or partly-owned subsidiaries operating in the oil and gas sectors, from the application of the provisions of sections 5 and 6 of the (Competition) Act, for a period of five years”.
The first such merger in the segment has already received the go-ahead from the Cabinet Committee on Economic Affairs (CCEA).
In July, the CCEA approved the sale of the government’s 51.11 percent stake in oil refiner HPCL to the country’s largest oil producer ONGC -- also a state-run entity. Reports also claim that talks have already begun on another big bang merger in the segment -- that of Indian Oil Corporation Ltd with Oil India Ltd. In fact, government officials had stated recently that they expect the HPCL-ONGC merger to be completed by the end of the current year.
The notification exempting state-run firms comes along expected lines, since current norms require mandatory approval from the CCI for combinations or deals beyond a certain stakeholding threshold in order to ensure that dominant market players do not end up with an effective monopoly. The exemption to public-sector oil & gas firms is not the first such, with the MCA exempting CCI approvals for mergers of nationalised banks.