NEW DELHI, Jan 20 (Reuters) - India's biggest explorer Oil
and Natural Gas Corp (ONGC) has agreed to buy the
government's majority stake in state-refiner Hindustan Petroleum
Corp for 369 billion rupees ($5.78 billion), ONGC said
It will pay a premium of about 14 percent on HPCL's current
market price for the 51.1 percent stake, the company said in a
statement to the stock exchange. It expects to complete the
transaction by end-January.
The deal is part of the government's objective to combine
various public sector enterprises "to give them the capacity to
bear higher risks" and create more value for shareholders, ONGC
Purchasing a stake in India's third biggest state-owned
refiner would also help ONGC to diversify its cash flow and
reduce its vulnerability to changing global crude prices, it
India's finance minister Arun Jaitley said in February that
the country plans to form a national oil major by combining
other state-owned firms. India also wants to expand in global
oil markets to meet its growing domestic demand for fuel.
India has about a dozen state-owned oil and gas companies,
with significant overlaps in operations. Alone they do not have
the financial clout to rival global oil majors in bids for
overseas exploration and production assets.
India is the world's third biggest oil consumer, importing
about 80 percent of its crude needs. Prime Minister Narendra
Modi has set a target to reduce dependence on oil imports by 10
percent by 2020.
ONGC will pay 473.97 rupees per share for HPCL. The closing
price for the shares on Friday was 416.2 rupees.
The proceeds from the HPCL stake sale will also help the
federal government pay for welfare programmes. Asia's
third-largest economy has said it aims to raise 725 billion
rupees through the sale of government stakes in various
($1 = 63.8200 Indian rupees)
(Reporting by Aditi Shah; editing by Clelia Oziel)
© 2018 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.