Within a week of acquiring 51.11% stake in Hindustan Petroleum Corporation Ltd (HPCL), Oil and Natural Gas Corporation (ONGC) is keen to acquire a stake in the gas utility GAIL India. If the deal come through, it will enable ONGC to emerge as one of the largest integrated public sector oil and gas company.
According to sources, ONGC will soon indicate its interest in acquiring the pipeline business of GAIL by filing a formal proposal with the Petroleum Ministry. ONGC is likely to submit the proposal after it has taken care of all formalities related to the HPCL deal.
ONGC's interest in taking over GAIL’s pipeline business is to aid in gas transportation. Besides ONGC, two other companies, Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL), have also indicated their interest in taking a stake in GAIL.
Currently, the government holds 54.8% stake in GAIL.
Meanwhile, Oil Minister Dharmendra Pradhan earlier cited the four-decade old Nationalisation Act to justify exempting ONGC from making an open offer after acquiring the government's 51.11 per cent stake in HPCL.
Oil and Natural Gas Corp (ONGC) acquired government's 51.11 per cent stake in HPCL for Rs 36,915 crore but unlike similar deals, it did not make an open offer to buy an additional 26 per cent stake from minority shareholders of HPCL.
"We are bound by the Nationalisation Act and character of HPCL could not have changed so no open offer was mandated," Pradhan told reporters here.
HPCL came into existence in 1974 when the government took over erstwhile Esso Standard and Lube India Ltd and nationalised it through the ESSO (Acquisition of Undertaking in India) Act passed by Parliament.
The Supreme Court had in 2003 cited this law and the Burma Shell (Acquisition of Undertaking in India) Act, 1976 and Caltex (Acquisition of Shares of Caltex Oil Refining India Ltd and all the Undertakings in India for Caltex India Ltd) Act, 1977 to rule that the government cannot privatise HPCL and Bharat Petroleum Corp Ltd (BPCL) without approaching the Parliament for changing the nationalisation act.
While Pradhan said Hindustan Petroleum Corp Ltd (HPCL) will continue to remain a central public sector enterprise (CPSE) by virtue of government holding majority stake in ONGC, he did not say as to how the character of HPCL would have changed if ONGC's shareholding in HPCL would have increased to 77 per cent after the open offer.
Rules currently state that a subsidiary, in which a PSU holds more than 50 per cent stake, is a state-owned firm.
