New Delhi: After BPCL (Bharat Petroleum Corporation Ltd), another big-ticket disinvestment that is rumoured to be in pipeline in the oil sector is that of HPCL (Hindustan Petroleum Corporation Ltd). A senior source aware of the matter, who spoke to PSU Watch on the condition of anonymity, said that even though there is no movement on HPCL disinvestment at the time, the government has given its promoter, ONGC (Oil & Natural Gas Corporation) a free hand to take a call on the matter.
HPCL disinvestment: Could bad synergy from previous deal be a reason?
“Keeping in mind that the ONGC-HPCL deal has failed to create a synergy between the two companies, the government has asked ONGC to take a call on it. The ball is now in ONGC’s court,” the source said. The government has already accorded its approval to the disinvestment of HPCL.
In January 2018, ONGC purchased the government’s entire 51.11 percent stake in HPCL for Rs 36,915 crore but HPCL continued to list ONGC under “public shareholder” category in its regulatory filings until August 2019. Instead, HPCL had listed President of India, in six shareholding pattern filings since then, as “promoter” without any stake in the company.
The SEBI directive
In a letter dated August 6, 2019, SEBI had asked HPCL to re-file “the shareholding pattern to the stock exchanges revising the status of ONGC as ‘promoter.’” SEBI had said, “Further, as informed by HPCL vide its email dated June 27, 2019, Government of India has also advised HPCL that ‘President of India’ will continue to be the promoter of HPCL and ONGC to be added as a Promoter below ‘President of India.’”
Even though the ONGC-HPCL deal was expected to create a synergy between a downstream and an upstream company, it had failed to do so. And that may be one of the reasons why the Centre may have decided to allow ONGC to take a call on whether to exit HPCL or not.