The Department of Investment and Public Asset Management (Dipam) has kicked off the process of sale of government stake in Hindustan Petroleum Corporation (HPCL) by appointing consultants and sending an information memorandum to the buyer, state-run Oil and Natural Gas Corporation (ONGC) said on Tuesday.
“We have received an information memorandum regarding the sale of government stake from Dipam yesterday (Tuesday). The deal is set to happen in FY18 only,” said Shashi Shankar, chairman and managing director, ONGC.
While Dipam has appointed Citibank and SBI Caps as consultants for the deal, Dipam has entrusted the consultancy itself to JM Financials. On the other hand, the Ministry of Petroleum and Natural Gas has appointed a little-known Noida-based company called Protocol to look into the deal.
To fund its acquisition, ONGC has already lined up its plans to sell its stake in Indian Oil Corporation and GAIL (India), and has also got approvals from shareholders to borrow up to Rs 25,000 crore further from the markets. “We are yet to finalise the strategy on how to arrange finance for the deal,” Shankar said.
The Union Cabinet had given its clearance to sell 51.11 percent government holding in HPCL to India’s largest explorer ONGC on July 19 this year, in order to create a global energy giant. Based on the current market cap of HPCL, the acquisition is likely to cost about Rs 35,000 crore. Meanwhile, ONGC has set a target of increasing oil production from the current 22 million tonnes (MT) to 27 MT by 2021-22. On the other hand, the natural gas production is set to almost double from 22 billion cubic metre (bcm) to 42 bcm by 2021-22.
“This is mainly due to certain new production that is set to be on track like KG-DWN-98/2,” he added. ONGC is investing about $5 billion for the project and expect 25.87 MT of crude and 45.49 bcm of gas during its lifetime. The production from the asset is set to start in 2019.
Source: Business-Standard 