Indian government may ask oil PSU Oil and Natural Gas Corporation (ONGC) to bail out green projects of Hindustan Petroleum Corporation Limited (HPCL). According to Reuters, the Government of India (GoI) may ask ONGC to raise funds to the tune of $1.9 billion ( ₹15,835 crores) for financing green projects of HPCL through issue of preference shares. Reuters claimed that two sources close to the developments briefed on the bailout plan.
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, Reuters claimed.
Based on rights issues previously announced by two other state-owned refiners, ONGC’s issue could be approx ₹15,500 crore ($1.86 billion), Reuters calculations show.
The comments come after India’s finance minister announced this year a plan to provide 300 billion rupees ($3.6 billion) in equity to help the state’s big oil refiners move toward cleaner energy.
The government is weighing options for HPCL, including directly providing loans at preferential rates, said the sources with direct knowledge of the matter. They sought anonymity because they were not authorized to speak to the media.
In 2018, New Delhi sold its entire 51.1% stake in HPCL to ONGC, making the company a subsidiary of India’s leading energy explorer. The government holds a 58.93% stake in ONGC.
Initially, the government had planned to inject funds into HPCL through an allotment of preference shares, but that risked pushing ONGC’s stake below 50% and ending the government’s indirect control of HPCL, one of the sources said.
ONGC, HPCL and the oil and finance ministries did not immediately respond to requests for comment.
India’s other big 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.
(With inputs from Reuters)
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Updated: 23 Nov 2023, 15:10 IST