India Eyes ONGC Rights Issue To Back HPCL Initiatives: Report
India plans to ask state-run Oil and Natural Gas Corp to consider launching a rights issue to help fund green projects at the refining arm Hindustan Petroleum Corp, according to two sources. This exercise could raise about USD 1.9 billion.
As reported by Reuters, the comments come after India's finance minister announced a plan this year to provide equity of 300 billion rupees (USD 3.6 billion) to help the big state oil refiners move towards cleaner energy.
The government is weighing options for HPCL, including directly providing loans at preferential rates, said the sources, who have direct knowledge of the matter. They sought anonymity as they were not authorized to speak with 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 (USD 1.86 billion), according to Reuters calculations.
In 2018, New Delhi sold its entire stake of 51.1 per cent in HPCL to ONGC, making the firm a subsidiary of India's top energy explorer. The government holds a stake of 58.93 per cent in ONGC.
Initially, the government had planned to infuse funds into HPCL by the allocation of preferential shares, but that risked pushing ONGC's stake below 50 per cent 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 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 per cent stake in IOC and a 52.98 per cent share in BPCL.
However, a lack of clarity from the government over how to infuse funds into HPCL has delayed the launch of rights issues for IOC and BPCL, sources said. Those issues had earlier been planned by the end of October, according to sources.
Combined, the three refiners aim to invest 3.5 trillion to 4 trillion rupees to reach a goal of net-zero emissions by 2040.
