The nation's largest energy driller ONGC hopes to complete the acquisition of the state-run oil marketer Hindustan Petroleum Corporation by March, chairman and managing director Shashi Shanker said here today.
The ONGC chief also refused to comment on the reported government move to monetise up to 60 per cent of the oil and gas fields developed by it and Oil India to private parties, saying they have not heard anything from the government but read it in newspapers only.
When announced in July, ONGC, one of the richest PSUs with a mount of cash, had pegged the cost of acquiring the 51.11 per cent government stake for around Rs 32,000 crore, but since then HPCL stock has rallied and there are fears that the oil and gas explorer will have to shell out much more than the initial estimate.
When completed, ONGC will become the first fully integrated state-run oil and gas company with significant upstream and downstream operations with many refineries and over 14,400 retail outlets.
On July 19, the cabinet had approved the sale of its 51.11 per cent in the third largest oil retailer and refiner to ONGC as part of its effort to create an integrated energy behemoth and also to meet the hefty Rs 72,500-crore selloff target it had budgeted for this fiscal.
When asked about the cost-escalation for the deal and how the debt-free ONGC will raise the newly floating cash outgo, Shanker dismissed all such fears.
"There is an impression that this acquisition decision was thrust on us. That's not the case. It was announced by the finance minister in the Budget and then they consulted us on what we want. We chose HPCL after considering all the pros and cons. We are confident that we'll be completing the deal before March end," Shanker said.
But he declined to quantify what ONGC will pay to shareholders, citing that it is being evaluated by the advisors to the deal.
Explaining why they chose HPCL over BPCL, he said, "We've around 15 million tonnes refinery in Mangalore Refinery & Petrochemcials, but we've no retail presence, while HCPL has huge retail presence with over 14,400 outlets, but does not have enough refining capacity. So there is a perfect business sense in choosing HCPL."
On the reported government move to sell up to 60 per cent stake in producing oilfields and gas fields of ONGC, OIL, he said, "We have not got any such proposal. I too read in the newspapers."
The move comes as the oil ministry is unhappy with the near stagnant oil and gas production and believes giving out the discovered fields to private firms will help raise output as they can bring in technology and capital.
It hopes that the move may boost domestic output and help meet the prime minister's target of reducing fossil fuel imports by 10 per cent by 2022. Currently, the country- the world's third-largest crude importer--buys up to 80 per cent of its supplies from overseas.
It can be noted that after the discovery of the Bombay High oil fields in 1974 and the Bassein gas fields in 1976, the oil and gas behemoth ONGC has not been able to bring in any new major fields into production in the last three decades.
The country has failed to draw in global oil majors since 1990 despite easing fiscal terms. The only exceptions are Royal Dutch Shell and BP which bought stakes from firms that had won drilling rights.
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