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Government's plan to create an integrated oil company may see ONGC taking over HPCL or BPCL

NEW DELHI: The government’s plan to create an integrated oil company will likely involve Oil and Natural Gas Corp taking over either Hindustan Petroleum Corp (HPCL) or Bharat Petroleum Corp (BPCL) but won’t result in a mega merger leading to the creation of an industry giant.  In his February 1 Budget speech, FM Arun Jaitley had said the government proposes to “create an integrated public sector oil major which will be able to match the performance of international and domestic private sector oil and gas companies”.  The merged entity will span the spectrum of activity from exploration to retail sale, said officials who elaborated on the strategy on condition of anonymity. “The actual intention behind the Budget announcement is not to create one huge oil firm,” one of them said. Under the plan, explorer ONGCBSE 1.04 % will “control” HPCL or BPCL, which are refining and distribution companies.  “Currently, HPCL and BPCL have the government as the majority shareholder. The plan is to transfer the government’s holding to ONGC, which will become the holding firm of one of these companies (HPCL or BPCL),” said a person cited above.