CCEA nod for ONGC’s purchase of Birla stake in MRPL

NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) today cleared ONGC’s purchase of AV Birla Group’s stake in Mangalore Refinery & Petrochemicals Ltd (MRPL).
Though the deal was sealed last year, the CCEA clearance could not be provided earlier as the transaction had to be first approved by the Public Investment Board (PIB), headed by the expenditure secretary.
While there was no official confirmation, government sources said the CCEA had approved the deal. However, no decision materialised on the proposed LNG policy. It is understood that the CCEA would decide on the issue only after the Union Budget is presented on February 28.
Considering the last hurdle in ONGC’s takeover of MRPL, the move would prevent the refinery from going to BIFR.
ONGC had proposed to buy Aditya Birla Group’s 37.4% stake in MRPL for Rs 59.43 crore at Rs 2 a share. The public sector organisation had also proposed infusion of Rs 600 crore in MRPL by way of additional capital. A formal announcement on the CCEA’s decision is expected tomorrow.
Sources said the CCEA approved scrapping of the tripartite agreement between the government of India, Hindustan Petroleum Corporation Ltd and the Aditya Birla Group for the setting up of MRPL.
The agreement, signed in 1987, was scrapped since the Aditya Birla Group had pulled out of the project.
While lenders are converting loans into equity on the basis of a financial restructuring plan, infusion of additional equity and purchase of AV Birla’s stake would take ONGC’s stake in MRPL to 51%.
The takeover of MRPL marks forward integration by ONGC at a time when the petroleum sector is going through a shake-up.
As of now, HPCL has 37.4% stake in MRPL while 25.2% is with the public. After restructuring, HPCL’s stake in the refinery would fall to 16.9% while lenders would have about 20.8% holding.