ONGC TWEAKS PLAN, MAY BUY HPCL

New Delhi, June 11: State-owned ONGC is keen to acquire India’s third-biggest fuel retailer HPCL in a `42,254 crore deal after finding Bharat Petroleum (BPCL) too expensive to buy.

Following up on finance minister Arun Jaitley’s Budget announcement of creating an integrated oil company, ONGC evaluated options of acquiring either HPCL or BPCL — the two downstream oil refining and fuel marketing firm.

While acquiring either one of them made a lot of business sense, ONGC found the nation’s second-biggest fuel retailer, BPCL too expensive, sources privy to the development said.

BPCL has a market cap of `1,01,738 crore and buying government’s 54.93 per cent would along have entailed an outgo of `55,885 crore.

So, ONGC is in favour of acquiring HPCL, which has a market cap of `54,797 crore and buying government’s entire 51.11 per cent stake would entail an outgo of `28,006 crore. Another `14,000 crore or so would be required in case open offer has to be made.

Sources said while initially the government was looking at creating an integrated oil company through merger of an oil producer with a refiner, the idea was dropped for the fear of not repeating of the Air India-Indian Airlines merger.

Similar differences in work culture and ethos prevail in upstream and downstream firms and so the exercise under consideration now is to only help government mop up resources and HPCL would become a subsidiary of ONGC.

ONGC found the nation’s secondbiggest fuel retailer, BPCL too expensive, sources privy to development said