Govt capex in HPCL to be routed through ONGC: Sources

Oil Marketing Companies (OMCs) Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), and Indian Oil Corporation (IOC) may not have to wait too long for the promised capital support from the government, but for HPCL, the infusion is unlikely to be in one fell swoop. CNBC-TV18 learns that where equity infusion into HPCL is concerned, the government will opt for a two-step process involving upstream energy public sector undertaking (PSU) ONGC.

Sources say that the proposal under consideration involves the government infusing money first into ONGC in exchange for equity shares, most likely on a preferential basis. This money will, in turn, be funneled into HPCL. That’s because the government only indirectly holds a majority stake in HPCL through ONGC.

As of September 2023, the government held a 58.89% stake in ONGC, which in turn holds a 54.9% stake in HPCL.

Should the government decide to follow this approach, the Cabinet will take a call on the exact amount of capital support. The Cabinet will also decide on how much of the ₹30,000 crores set aside for equity infusion into the three government-owned OMCs—HPCL, IOC, BPCL—will be eventually used before the financial year ends on March 31, 2024. The exact amount for each of these companies will also be decided then.

However, sources also add that the entire earmarked amount of ₹30,000 crores may not be used up before the year ends, meaning the government would have a cushion when it announces the Vote on Account in Parliament at the end of January.