Oil & Natural Gas Corp and its unit Hindustan Petroleum Corp have struck a deal to acquire the 34.56% they didn’t already own in petroleum products pipeline operator Petronet MHB Ltd for about Rs 371 crore ($51.8 million).
ONGC and HPCL said in separate stock-exchange filings they have signed agreements with eight state-run banks to buy a 17.28% stake each in Petronet MHB. The sellers include State Bank of India, Bank of Baroda and Canara Bank.
State-run ONGC, India’s biggest explorer, and refiner HPCL each currently own a 32.72% stake in Petronet MHB. ONGC holds a 51% stake in HPCL.
The two energy companies said that the acquisition will open up possible opportunities for synergy, better cost economics and revenue maximization.
Petronet MHB was set up in 1998 to transport petroleum products through a pipeline from the Mangalore refinery in Karnataka to oil marketing companies’ terminals at Hassan and Devangonthi. The Mangalore refinery is also operated by an ONGC subsidiary.
The company was initially a joint venture of Petronet India Ltd and HPCL. In 2006, it went through a debt restructuring. Thereafter, HPCL and ONGC each held a 29% stake each while a group of state-run banks owned 34% and Petronet India an 8% stake. Petronet India sold its stake to ONGC and HPCL in August 2016.
Petronet MHB recorded revenue from operations of Rs 158.44 crore for the year ended March 31, 2019, up from Rs 130.89 crore the year before.