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Deal or no deal: Letter to BS on ONGC's HPCL acquisition

The fact that the government is a major shareholder in ONGC means that really nothing has changed

Business Standard 

This is with reference to “ONGC-deal has logic, but can’t address fiscal woes” (January 26). I think the ONGC-mega deal is merely a case of transferring money from from one pocket of the government to another. It is difficult to call it disinvestment in the strict sense of the term, though technically, it may be so. Both the entities are state controlled; so how does this deal qualify as disinvestment, which should really mean sale to the private sector or to retail investors? This deal fails on this criterion.

The deal only makes an owner of the stake that the government held earlier in The fact that the government is a major shareholder in means that really nothing has changed. Admittedly, there is merit in the deal due to obvious benefits of synergy; an excellent case of vertical integration which should lead to savings in operational costs and will hopefully make more competitive. But, again, who are ONGCs competitors? Primarily and No private sector company is really into retailing of fuels in a big way. So, unless the long-term plan is to weaken these two giants and for to buy them over also at some stage, this deal does not make much sense. Krishan Kalra Gurugram

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First Published: Sun, January 28 2018. 22:52 IST