Companies

HPCL board will be similar to MRPL, OVL: ONGC chief

Twesh Mishra New Delhi | Updated on January 22, 2018

‘We wish we had the option of allocating crude oil’

ONGC is gearing up to enable synergy within its subsidiaries after getting all approvals to acquire a 51.11 per cent stake in fellow public sector undertaking, Hindustan Petroleum Corporation Ltd.

Speaking to BusinessLine, Shashi Shanker, ONGC Chairman and Managing Director, threw some light on the way forward once the transaction is concluded. He said that the HPCL retail infrastructure will be used to market products from ONGC’s other midstream assets. Excerpts:

Will there be a change in the board composition of HPCL post conclusion of the deal? Who will be the chairman of HPCL now?

The approval is that HPCL will remain an independent entity as a Central Public Sector Enterprise. As of now it’s not a merger, it’s an acquisition.

The Chairman is a very insignificant terminology. It should be something similar to Mangalore Refinery and Petrochemicals Ltd (MRPL) and our other subsidiaries such as ONGC Videsh Ltd (OVL) where there is a Managing Director and the Chairman is non executive.

Have you approached the markets for raising debt to finance the deal?

We have not sounded out any bank but have asked for proposals from them. We have approvals for ₹35,000 crore and we will go for the most attractive option, to finance the deal if need be.

Is the deal a divestment or a strategic sale?

I don’t understand the terminology whether it is a divestment or a strategic sale, for me it’s just a deal.

Will HPCL be at an advantage in terms of crude sourcing after the deal? Will HPCL get a preference if it sources crude oil from ONGC?

Yes, HPCL will have an advantage because they will be sourcing a larger volume of crude together with MRPL. So you get a better price, the volume advantage will be there.

We do not have the option to allocate crude oil and I wish we had that option.

Will you ask the government to permit you to exercise the right to preferably allocate crude?

Yes, we have been asking for that option because we produce some of the best grades of crude oil.

What will be the status of MRPL’s LPG production? Will the product be marketed through HPCL?

Yes, the synergy will be there and that will be done. Even products of ONGC Petro Additions Ltd (OPAL) can be marketed through the retail networks now. At the end of the day, we have to use it in the best possible way.

What about HPCL’s cross holdings with ONGC?

We will take a decision on that at the appropriate time.

Published on January 21, 2018

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