MRPL will be key pivot in ONGC-HPCL deal.

As Oil and Natural Gas Corporation (ONGC) prepares to take over Hindustan Petroleum Corporation (HPCL), it will mark a homecoming for another entity involved in the exercise.

Mangalore Refinery and Petrochemicals (MRPL), which was once part of HPCL and then changed hands to ONGC, will now to be back in the fold of its original parent. This is part of the overall plan where HPCL is expected to buy MRPL from ONGC for a hefty Rs. 15,000 crore.

While the payout for ONGC to buy out the Centre’s 51 per cent stake in HPCL will cost nearly Rs. 30,000 crore, a sale of its own equity in MRPL as part of the integration effort will reduce this outgo by half. In the process, this will mark a journey back home for this 15 million tonne refining company which was first created as a joint venture of HPCL and the AV Birla Group in the early 1990s.

When the partners decided to call it a day, HPCL had the first right of refusal in buying out its ally’s 37 per cent stake but did not seem remotely interested. This was the time an aggressive ONGC stepped into the picture and bought out the AV Birla Group’s stake in 2003 as part of the exercise to gain control.

Today, ONGC is the major shareholder in MRPL with 72 per cent, while HPCL’s equity has whittled down to a paltry 17 per cent. During these years, it has continued to market MRPL’s diesel and petrol across its vast array of retail outlets even while its top management has constantly rued “losing a valuable asset” to ONGC.

HPCL had also, from time to time, hinted to the Petroleum Ministry that it was keen on increasing its stake in MRPL beyond the meagre 17 per cent but nothing came out of these pleas. ONGC was not remotely interested in selling its stake even while little had been achieved from its MRPL acquisition in terms of entering the fuel retail space.

HBL