Wednesday, 12 December, 2018

ONGC ties up loans with 3 banks for HPCL acquisition

Modi govt indulging in'economic jugglery to meet disinvestment targets hide rise in fiscal deficit: Cong ONGC ties up loans with 3 banks for HPCL acquisition
Nellie Chapman | 26 January, 2018, 09:19

The logo of Oil and Natural Gas Corp's (ONGC) is pictured along a roadside in Ahmedabad, India, September 6, 2016.

ONGC holds a 13.77 per cent stake in the nation's biggest refiner Indian Oil Corp (IOC), which at Tuesday's trading price is worth over Rs 26,200 crore. The filing detailed that PNB will lend Rs10,600 crore, BOI Rs4,460 crore and Axis Bank Rs3,000 crore.

The acquisition, ONGC's largest after its Rs7,738 crore acquisition of Gujarat State Petroleum Corp's 80-per cent stake in KG basin gas block, would allow for better integration and create India's largest integrated oil company.

ONGC is a zero-debt company and reportedly wants to retain that status.

According to Shanker, acquisition of the Central government's 51 per cent stake in HPCL worth over Rs 36,900 crore can also be done through the combination of various options available with ONGC. The banks are Punjab National Bank, Axis Bank and Bank of India, with agreements signed on 22 January for loans totalling to Rs18,060 crore. But the financial ratios of ONGC will remain largely unchanged post the deal and the transaction is likely to be credit neutral for the company.

"We will use our (Rs 12,000-13,000 crore) cash first and then the liquid assets and debt will be last", Shanker had said.

"We are bound by the Nationalisation Act and character of HPCL could not have changed so no open offer was mandated", Pradhan told reporters here.

Accordingly, ONGC has raised it first-ever debt-raising plans by 40 per cent to finance its Rs36,915-crore acquisition of Hindustan Petroleum (HPCL).

The HPCL stake sale will help the government to cross its selloff target for the first time and help it to stick to its fiscal deficit target of 3.2 per cent of GDP.

The party also criticised the Government for not passing on to the consumer the benefit of fall in crude prices in the global market, thus taxing the common man to the tune of Rs 6 lakh crore. The State had signed an agreement with the ONGC on Saturday, January 20, 2018, selling 51.11% equity shares it held in the HPCL at a consideration of Rs. 36,915 crore. He, however, refused to share details.