Centre plans to ask ONGC to consider rights issue to fund HPCL: Report
India plans to ask state-owned Oil and Natural Gas Corp to consider launching a rights issue to help finance green projects at Hindustan Petroleum Corp’s refining arm, two sources said, an exercise that could raise about $1.9 billion.
The comments come after India’s finance minister announced a plan this year to provide 300 billion rupees ($3.6 billion) in equity to help major state oil refiners move toward cleaner energy.
The government is considering options for HPCL, including providing immediate loans at preferential rates, said the sources, who have direct knowledge of the matter. They sought anonymity because they were not authorized to speak to the media.
The oil ministry is awaiting a response from the finance ministry on the plan for ONGC to launch a rights issue, one of the sources said.
Based on rights issues previously announced by two other state refiners, an ONGC issue could amount to about 155 billion Indian rupees ($1.86 billion), Reuters calculations show.
In 2018, New Delhi sold its entire 51.1% stake in HPCL to ONGC, making the company a subsidiary of India’s largest energy explorer. The government has a 58.93% stake in ONGC.
Initially, the government planned to inject money into HPCL by allotting preferential shares, but that risked taking ONGC’s stake below 50% and ending the government’s indirect control over HPCL, said one of the sources.
ONGC, HPCL and the oil and finance ministries did not immediately respond to requests for comment.
India’s other major state-owned refiners, Indian Oil Corp and Bharat Petroleum Corp, have announced plans to launch rights issues of 220 billion and 180 billion rupees respectively.
The government has a 51.5% stake in the IOC and a 52.98% stake in BPCL.
However, a lack of clarity from the government on how to pump money into HPCL has delayed the launch of rights issues for the IOC and BPCL, sources said. These issues were earlier scheduled for late October, sources said.
Combined, the three refineries aim to invest Rs3.5 trillion to Rs4 trillion to achieve net-zero emissions by 2040.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)