• IOC/BPCL-GAIL M&A deal on govt’s agenda this fiscal

    The government after successfully merging fuel retailer Hindustan Petroleum with Oil and Natural Gas Corporation (ONGC) last year, has now set its eye on merging gas-utility giant GAIL with Indian Oil Corporation (IOC) or Bharat Petroleum (BPCL), a news report said today.

    According to a report by new agency IANS, the government is looking to split GAIL’s gas marketing and transportation business and intends to merge the marketing business with either IOC or BPCL. The government is also mulling to sell GAIL’s transportation business to a strategic partner.

    Both the fuel retailers — IOCL and BPCL — had approached the petroleum ministry in 2017 to acquire the government’s stake in GAIL.

    Oil minister Dharmendra Pradhan had last week told ETEnergyWorld that the ministry has instructed GAIL to come up with a plan for bifurcating its marketing and transmission business.

    “Marketing and laying of pipelines or transmission are two different segments, the ministry has always been of the opinion that these two job functions being done by GAIL should be separated. Yes, we have told them to prepare a road map for this,” Pradhan said. He added that as of now no timeline on the split has been decided.

    Interestingly, the long-standing plan of splitting GAIL may now finally reach completion considering the government also needs to meet its higher disinvestment target of Rs 1.05 lakh crore.

    Finance Minister Arun Jaitley in his Budget 2017-18 speech had expressed the government’s intention to strengthen central public sector enterprises through consolidation, mergers and acquisitions, saying that the possibilities of such restructuring were visible in the oil and gas sector. Under the proposal, the government intends to create an integrated public sector “oil major” which would match the performance of international and domestic private sector oil and gas companies.

    The government has expressed its resolve to continue with public sector undertaking consolidation with Finance Minister Nirmala Sitharaman making a case for it in her Budget speech this year.

    IOC is the country’s second-largest gas marketer.

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