Exxon wants to buy out government's 51% stake in Hindustan Petroleum
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US oil major Exxon wants to buy out government's 51 per cent stake in Hindustan Petroleum
(Thursday, May 20, 1999)
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Hemangi Balse in Mumbai
American oil giant Exxon Corporation has proposed to buyout the government's 51 per cent stake in the Rs 20,000 crore Hindustan Petroleum Corporation Ltd (HPCL).
In a proposal submitted early this month, Exxon has indicated its willingness to buy out the company directly from the government rather than taking a piece-meal approach by becoming a strategic or a joint venture partner.
A senior official in the government confirmed Exxon's proposal and pointed out that that the proposal is being examined. He refused to divulge details.
When contacted, HPCL chairman H L Zutshi denied the move. "There is no such move, whatsoever. HPCL will continue to be a public sector enterprise," Zutshi said.
Exxon Corporation spokesperson Raoulf Kizilbash also declined to comment. "We cannot comment on anything," he said.
If accepted, HPCL will become a predominantly Exxon company as was in 1974, when subsidiaries of foreign oil companies were nationalised.
This year HPCL celebrates its silver jubilee. The country's second largest refiner was formed after the government tookover and merged the erstwhile Esso and Lube India undertakings in 1974. Caltex was also taken over by the government in 1976 and subsequently merged. This was followed by the merger of Kosan Gaas Company, the concessionaires of HPCL in the domestic LPG market in 1979.
Industry sources claimed that Exxon made a "calculated offer" after considering Shell-Aramco's proposal to be a strategic partner with HPCL. Exxon has already tested Indian waters and intends to become a dominant player in the downstream marketing network.
Mumbai-based analysts said the offer might reflect the corporation's strength with a market share of 20 per cent. This also encompasses the huge retail marketing network of HPCL which allows it to market products from two refineries, one each in Mumbai and Vishakapatnam. It also sells products of Mangalore Refineries and Petrochemicals Ltd (MRPL), set up in the joint sector with the Aditya Birla group.
Following the merger with Mobil Corporation, Exxon-Mobil has become the world's largest petroleum company. The synergy in their businesses is expected to reap benefits of more than $2.8 billion this year (pre-tax). |
