NEW DELHI: Petroleum Ministry is not considering any proposal to merge 13 state-owned oil PSUs like ONGCBSE 0.45 %, IOCBSE 1.38 % and GAILBSE 0.24 % to create a behemoth, Oil Minister Dharmendra Pradhan said today.
“Ministry is not considering any proposal (for the merger). It is an idea which was reportedly mooted by a Director of a state-owned company and like all ideas have to be debated, we are debating it,” he said here.
His ministry has 13 PSUs ranging from upstream oil producers like ONGC and Oil India to downstream oil refining and fuel marketing firms IOC, BPCLBSE 0.31 % and HPCLBSE -1.56 % to gas transporter GAIL India Ltd to engineering firm Engineers India Ltd.
An idea was mooted to merge them to create a behemoth that cannot just compete globally but also withstand the oil price volatility by using profits refining business make in low oil prices to make up for losses in upstream and vice a versa.
Pradhan said it was just an idea and he is willing to look at a viable proposition. “I am open to looking at options… that’s all I have said,” he said.
Top eight listed state-owned oil and gas companies have a combined market capitalization of about $80 billion, making it ninth largest globally.
Pradhan also said he is pitching with the finance ministry to cut cess on domestically produced crude oil to provide life to companies like Oil and Natural Gas Corp (ONGC).
“It should be according to market dynamics,” he said adding he has asked the Ministry of Finance to look into the request by oil producers like ONGC and Cairn India to reduce cess.
In the Budget for 2016-17, Finance Minister Arun Jaitley had moved from a fixed Rs 4,500 per ton cess on domestically produced crude oil to a percentage of oil prices or ad valorem rate of 20 per cent.
At crude oil price of $45 per barrel, the two breakevens and if rates go up, oil companies will end up paying more, ONGC Chairman and Managing Director Dinesh K Sarraf said.
