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IOC, BPCL keen to acquire GAIL to become fully integrated energy firms

The government's 54.89% stake in GAIL is currently worth about Rs 46,700 crore

Press Trust of India  |  New Delhi 

Indian Oil Corporation, IOCL, IOC
Indian Oil Corporation logo outside a fuel station in New Delhi. Photo: Reuters

Corp (IOC) and Corp Ltd (BPCL) are both keen to acquire gas utility Ltd to become fully integrated energy and have separately indicated to the petroleum ministry their interest in taking over GAIL to help add natural gas transportation and marketing business to their kitty, official sources said. GAIL, on the other hand, feels a merger with and gas producer would be more appropriate. The merger options were indicated following Finance Minister Arun Jaitley's announcement in the 2017-18 Budget speech on the government's plan to create integrated public sector majors that will be "able to match the performance of international and domestic private sector and gas companies". ONGC, India's largest and gas producer, proposed to acquire refiner and fuel marketing company HPCL, which was approved by the Cabinet. and Natural Gas Corp (ONGC) is currently in the process of acquiring the government's 51.11 per cent stake in HPCL, which at current prices is worth over Rs 33,000 crore. Sources said and gave separate options for the integration. The government's 54.89 per cent stake in GAIL is currently worth about Rs 46,700 crore. Integration options suggested by other would be taken up only after ONGC-merger is complete, they said. IOC, the largest refiner and fuel marketing company in the country, wanted to either acquire another refiner to add to its capacity or a gas company like GAIL. The firm feels it already has a fledging gas business in under-construction LNG terminals, city gas distribution projects and gas marketing.

GAIL, the nation's biggest gas transporter and marketing company, would complement that, it felt. on the other hand too has natural gas ambitions and wrote to the ministry saying GAIL was its number one choice for acquisition. It listed India Ltd (OIL), the nation's second largest exploration firm, as its number two choice. The government holds 66.13 per cent stake in OIL, which at current market price is worth about Rs 18,000 crore. GAIL feels merger with makes more sense as such a move would integrate gas producer with transportation and marketing network. Sources said the government has not taken any decision on the proposals sent by other PSUs. The government is keen on the PSU-PSU merger or integration options as it would help it cash out on its holding yet retain its control. Also, it would help build bigger to better compete with global giants and withstand price volatility.

First Published: Mon, December 25 2017. 17:13 IST
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