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| HPCL plans to sell stake in arm through IPO |
| Ajay Modi / New Delhi Aug 29, 2010, 00:04 IST |
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State-owned Hindustan Petroleum Corporation (HPCL), the country’s second-biggest oil marketing company, plans to sell a part of its stake in HPCL-Mittal Energy (HMEL) through an initial public offer (IPO).
“We have a 49 per cent stake. It does not make a difference if we bring it down to 26 per cent through an IPO. The money thus raised can be used in our other businesses,” said an HPCL executive. According to him, once the refinery goes onstream, the company will get a good valuation. HMEL is a joint venture between HPCL and Singapore-based Mittal Energy Investment, a group company of India-born steel tycoon Lakshmi Mittal. Both partners hold 49 per cent each in the company, while the rest is held by financial institutions.
HMEL is setting up a 9-million tonne refinery in Bathinda (Punjab). It has invested close to Rs 19,000 crore for this.
The refinery will produce petroleum products complying with Euro-IV emission norms. It will also have a 165-megawatt captive power plant and a crude oil pipeline from Mundra (Gujarat) to Bathinda, with single point mooring and crude oil terminal at Mundra.
The oil marketing companies, HPCL, Indian Oil Corporation and Bharat Petroleum Corporation, have been cash strapped as they sell diesel, kerosene and domestic liquefied petroleum gas at government-regulated prices. Moreover, their performances depend on international crude oil price, as the country imports over 75 per cent of its requirements. For the quarter ended June 30, HPCL reported a net loss of Rs 1,884 crore, compared to a profit of Rs 649 crore in the corresponding quarter last year. The other two oil marketing companies also incurred heavy losses.
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