Giving a big boost to the government’s disinvestment programme, oil giant ONGC has finally entered into an agreement to buy a majority stake in HPCL, adding Rs 36,915 crore to Arun Jaitley’s kitty for this financial year itself.
Giving a big boost to the government’s disinvestment programme, oil giant ONGC has finally entered into an agreement to buy a majority stake in HPCL, adding Rs 36,915 crore to Arun Jaitley’s kitty for this financial year itself. ONGC has entered into a share purchase agreement for acquiring the government’s entire 51.11% stake of HPCL on 20th January 2018 at a cash purchase consideration of RS 473.97 per share with a total acquisition cost of Rs 36,915 crore, the state-run exploration and production company said in a statement. The parties expect to complete the transaction before end of January 2018, ONGC added. Quick calculations show that ONGC will pay about 14% premium for HPCL’s shares over its Friday’s closing share price on BSE. The parties expect to complete the transaction before end of January 2018.
The deal will add raise nearly Rs 37,000 for the government.The fiscal deficit reached Rs 6.12 trillion or 112% of the full-year budget during eight months to November. In less than a month of announcing additional market borrowings of Rs 50,000 crore for the fiscal year ending March-18, the government announced on Wednesday that it has cut its requirement to Rs. 20,000 crore from Rs 50,000 crore estimated earlier.
The Core Group of Secretaries on Disinvestment (CGD) headed by the Cabinet secretary had earlier approved the broad contours of Oil and Natural Gas Corporation’s proposed acquisition of the government’s 51.11 percent stake in Hindustan Petroleum Corporation, paving the way for the transaction later this month, The Financial Express had reported on January 10. The government has raised a record Rs 54,337.60 crore so far this year against its FY18 target of Rs 72,500 crore, of which Rs 15,000 crore is through strategic sales. It was only listing of insurance companies that overshoot the disinvestment target of Rs 11,000 crore this fiscal.
Earlier in February 2017, Finance Minister Arun Jaitley proposed setting up an integrated oil PSU (public sector undertaking) by merging companies with synergy in order to match the scale of the global oil giants. The government is of the view that the consolidation of state-owned oil firms would give financial muscle to them in order to compete with global players like Brazil’s Petrobras to acquire oil assets overseas as well as compete with private sector players in the domestic market.