Public sector oil major ONGC is planning to join hands with IndianOil for acquiring West Bengal Government’s 40 per cent stake in the ailing Haldia Petrochemicals Ltd, according to sources. IOC holds a minority nine per cent interest in HPL.
Though ONGC Chairman S. Vasudeva could only confirm that his company was “examining” the recent invitation of expression of interests (EoI) by the West Bengal Government, senior officials in the company said the upstream major would like to take IOC on board.
“Since IOC has an existing interest in the company, we would like to take them on board. We will not try to outbid each other,” an ONGC source said.
Second attempt
ONGC sources, however, confirm that taking over management control in HPL is easier said than done, considering the ongoing legal battle between the two lead promoters - The Chatterjee Group (TCG) and the State Government. Also, TCG has a first right of refusal to any such stake sale.
Interestingly, this is ONGC’s second attempt in acquiring equity interest HPL. In early 2012, Mangalore Refineries and Petrochemicals Ltd (the refining outfit of ONGC Group), proposed a hand-holding relationship with HPL.
It was planned that MRPL will offer feedstock to the loss-making HPL at flexible terms. In return, HPL management would recommend handing over management control to ONGC-IOC combine.
Since the State Government already decided to offload its stake in HPL, ONGC-IOC combine proposed acquiring the same.
However, the proposal did not receive much favour from either the TCG camp or the State Government. Also the HPL board had undergone a change as the State decided to take over the management control from TCG.
The changeover did not augur well for HPL as the company’s stretched finances were further strained in the last one year.
Complexity unlimited
“The proposition is a complex one,” admits an ONGC source. While the market outlook has improved for the petrochemicals sector in the last one year, on the flip side, HPL’s losses increased further.
“We are now busy assessing the value of the company,” the official said.