NEW DELHI: State-owned oil sector giant Oil and Natural Gas Corp (ONGC) has received in-principle approval from its board of directors to explore options, including the merger of subsidiaries MRPL and HPCL.
The move by the board is largely in line with the Union Budget announcement made in February to create a public sector oil major that can compete and perform well against other global and domestics firms. The company also noted that the announcement had already seen ONGC take over the government’s stake in HPCL earlier this year.
“The board of directors of ONGC, at the 308th meeting held on June 29, accorded its in-principle approval for exploring options for the restructuring of ONGC group companies,” the company said in its statement, adding that an advisor would be appointed to suggest possible options. The board of the company will then take a call on the options suggested by the advisor.
The merger of subsidiaries MRPL and HPCL has been mooted for a while now, with officials pointing out that consolidating them would result in beneficial synergies.
While no further details have been divulged in so far as the restructuring is concerned, ONGC said that “the restructuring proposal shall safeguard the overall interest of the public shareholders of all ONGC group companies”.
While MRPL operates a 15 million tonnes a year refinery at Mangalore in Karnataka, HPCL has two refineries at Mumbai and Vizag. OPaL has built a Rs 32,000 crore petrochemical complex at Dahej in Gujarat, while ONGC Tripura Power Co Ltd operates a 726 MW power plant at Palatana.