The Government of India entered into an agreement with Oil and Natural Gas Corporation Ltd (ONGC) on Saturday January 20 for the sale of its entire 51.11 per cent equity share-holding in Hindustan Petroleum Corporation Ltd (HPCL) at a consideration of Rs 36,915 crore (US$5.78 billion).
ONGC said it will acquire the government’s entire 778,845,375 equity shares in HPCL at Rs 473.97 per share. The deal will be closed by end of January 2018.
Through this acquisition, ONGC will become India's first vertically integrated "oil major" company, having presence across the entire value chain.
HPCL had a turnover of Rs 2,13,489 crore and profit after tax of Rs 6,502 crore during 2016-17. It markets around 35.2 million tons of petroleum products — a market share of about 21% — and has around 15,000 fuel retail outlets. ONGC contributes around 70% of Indian domestic production of crude oil and natural gas.
The share sale will help government exceed its divestment target of Rs 72,500 crore in 2017-18 - a first for the government ever. The government has already raised Rs 54,337 crore so far this year.
The combined market value of ONGC and HPCL is Rs 311,925 crore, or $49 billion, comparable with Russian energy giant Rosneft's $61 billion.