HPCL will retain its brand even after ONGC’s purchase of the Centre’s 51.1% stake in the oil major, according to a top official of ONGC.
ONGC would also not make major changes to HPCL’s functioning, Shashi Shanker, CMD, ONGC told the media on Sunday, a day after the Centre announced deal.
Deal completion
The deal’s price — ₹36,915 crore — was in line with the recommendations made by the independent evaluator, he said. The transaction was expected to be completed by the end of January.
“With HPCL coming into our fold, look at the marketing capability,” he said. “At the moment, HPCL markets 35.2 million tonne (mt) of refined products. Its refinery capacity is 17-18 mt and MRPL’s capacity is 15 mt. So, we can leverage this marketing capacity. The other point is that they are sourcing crude oil, the same is the case with us. So, if we do it together, we will have greater bargaining power.”
ONGC currently owns 71.63% in MRPL, 13.77% in IOC, 12.5% in Petronet LNG, and 4.87% in GAIL.
Mr. Shanker said that ONGC was keeping all options open in terms of funding the deal.
“We have some liquid assets, about ₹25,000-₹30,000 crore. And simultaneously, we have tied up short-term borrowing at a very competitive rate. As of now, we have not yet decided when we will have to make the payment. At that point, we will look at all our options and pick the best one. We wanted to have more flexibility in our funding options, so we increased the borrowing limit from ₹25,000 crore to ₹35,000 crore,” Mr. Shanker said. “We have not yet decided on how much we will borrow,” he added.
“We had given the task of pricing to an independent evaluator, EY,” Mr. Shanker said. “There are different methods for evaluation and they went through all the methods. The price we have decided is in line with what was recommended.”
One of the major reasons behind the acquisition was to hedge against the volatility in crude oil prices, Mr. Shanker said
