Saturday, September 1, 2018

HPCL in talks with ONGC to merge MRPL with itself: Report

STATE-run refiner Hindustan Petroleum Corporation (HPCL) is in talks with parent Oil and Natural Gas Corporation (ONGC) to merge its subsidiary Mangalore Refinery and Petrochemicals (MRPL) with itself, a national daily reported.
HPCL, which owns 17 percent stake in MRPL, is in discussion with ONGC for a transfer of shares. ONGC holds a 71.63 percent stake in MRPL.
The move has been seen as beneficial for HPCL in many ways.
"With MRPL, we can unload crude at Mangalore...
and get freight advantage. We have a big R&D facility in Mangalore. We have refinery in Vizag in the East Coast, Mumbai in West Coast, Bathinda in North and Mangalore in South. We can integrate facilities and create lots of synergies," HPCL Chairman Mukesh Kumar Surana told the news daily.
However, the merger is under discussion at the moment and no timeline has been decided as yet. "We are in discussions with ONGC on this as the decision of three boards are involved and we are progressing on that," Surana was quoted as saying.
HPCL intends to invest around Rs 75,000 crore as capital expenditure over the next five years, of which around Rs 8,425 crore will be invested this financial year.
Out of the total amount, Rs 33,303 has been earmarked for refinery expansion, Rs 29,554 crore for marketing, Rs 774 crore for renewables and research and development, and Rs 12,000 crore for joint ventures.
In January this year, the government sold its 51.11 per cent stake in HPCL to ONGC for Rs 36,915 crore, throwing up challenges on consolidating many group companies. Post-merger, MRPL fuel stations will get re-branded as HPCL.
“After we merge, there won’t be two separate entities, namely, HPCL and MRPL. HPCL has got a brand value and that brand value has got a number. We have got 15,062 outlets and MRPL has six outlets. So, the logical thing would be that MRPL outlets would be rebranded as HPCL, because MRPL itself will get rebranded in that situation,” Surana said.
MRPL has a standalone refinery, which assures supply and market. But what is not that obvious is further synergies. Each refinery has got multiple units, the primary distillation, the secondary processing, finishing units and each refinery is designed for certain set of design parameters. But, when you have more than one refinery in the kitty, you can also take advantage of the small questions which you have got in certain intermediate units, and there you can create value by optimised use of the intermediate units, which is one thing that gives additional benefit, he said.
“We also have a joint venture pipeline between ONGC and HPCL, linking Mangaluru-Hassan-Bengaluru, which shifts the products predominantly from Mangaluru refinery/ coast. We are in discussions to integrate these facilities and create value in the overall production, movement, sale and distribution of products,” Surana added.

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