IOC, BPCL may buy 26% stake each in GAIL for over ₹20,000 cr

Indian Oil Corp. (IOC) and Bharat Petroleum Corp Ltd (BPCL) may buy 26% stake each in gas utility GAIL India Ltd, paying the government over ₹20,000 crore each to become integrated energy firms.

Following finance minister Arun Jaitley’s February 2017 Budget announcement of creating integrated oil majors, IOC and BPCL had submitted separate proposals to buy the government’s 54.89% stake in India’s biggest gas marketing and transportation firm, GAIL.

A person familiar with the matter said since the government is not looking at actual merger of oil companies but only transfer of its ownership to a cash rich PSU, the best option would be to split the 54.89% holding in GAIL equally between IOC and BPCL.

In January this year, Oil and Natural Gas Corp (ONGC) bought out government’s 51.11% stake in refiner Hindustan Petroleum Corp Ltd (HPCL) for Rs36,915 crore. But HPCL hasn’t been merged with ONGC and continues to remain a separate listed company with the same board. After the buyout, HPCL has become a subsidiary of ONGC, which gets up to two seats on the company board.

The person aware of the matter said IOC and BPCL too can follow the same model and split the government’s stake equally among themselves. GAIL will become their subsidiary and will continue to operate as a listed company with an independent board.

IOC and BPCL would get to appoint one director each on GAIL board.

NEWDELHI:State-owned