IOC, BPCL may buy 26 per cent stake each in GAIL

Following Finance Minister Arun Jaitley’s February 2017 Budget announcement of creating integrated oil majors, IOC and BPCL had submitted separate proposals to buy the government’s 54.89 per cent stake in India’s biggest gas marketing and transportation firm, GAIL. 

A top source said since the government is not looking at actual merger of oil companies but only transfer of its ownership to a cash rich PSU, the best option would be to split the 54.89 per cent holding in GAIL equally between IOC and BPCL. 

At Friday’s closing price of Rs 440.85 a share for GAIL on BSE, the stake is worth close to Rs 410 billion. In January this year, Oil and Natural Gas Corp (ONGC) bought out government’s 51.11 per cent stake in refiner Hindustan Petroleum Corp Ltd (HPCL) for Rs 369.15 billion. But HPCL hasn’t been merged with ONGC and continues to remain a separate listed company with the same board. 

After the buyout, HPCL has become a subsidiary of ONGC, which gets up to two seats on the company board. The source said IOC and BPCL too can follow the same model and split the government’s stake equally among themselves.