(ET)
Oil & Natural Gas Corp. could issue new shares, borrow or sell its 14% stake in Indian Oil Corp to fund the acquisition of Hindustan Petroleum, but a decision would hinge on the explorer’s investment plans and the government’s priorities, experts said.
Selling its stake in IOC would be a smart switch of investments, said BK Namdeo, former director for refineries at HPCL. ONGC is only a passive investor in IOC, receiving dividend. ““But for a similar investment in HPCL, you get full control of the company,” he said. IOC has about 81 million tonnes of processing capacity, 26,200 petrol pumps and a fast-growing petrochemicals business. By comparison, HPCL controls 25 million tonnes of refining capacity and 14,400 pumps. By regrouping their businesses, ONGC and HPCL could create much larger value for shareholders, Namdeo said.
