State-run oil and gas explorer ONGC's plan to complete the merger of its refining subsidiary MRPL with recently acquired HPCL to align its upstream and downstream operations into two verticals has got delayed.
The process is now expected to be completed by FY24 as ONGC has decided to consolidate its refining and petrochemicals business around MRPL first before pushing for its merger.
Sources said that the process of merging ONGC's two oil refining subsidiaries, Hindustan Petroleum Corp Ltd (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL), will start only after the company completes merging ONGC Mangalore Petrochemical Ltd (OMPL) with MRPL.
"The merger (HPCL and MRPL) under conservative assumptions could happen by FY24-end as the MRPL-OMPL merger has to happen first and that business should continue for five years with FY19-end as the effective date of their merger at the least," company officials privy to the development said.
Under the plan, MRPL may become a subsidiary of HPCL first. Under liberal assumptions, the merger could start in 1-2 years as OMPL gets merged with MRPL by then. OMPL has now become a 100 per cent subsidiary of MRPL.
The board of MRPL on October 19 last year had approved the acquisition of 49 per cent stake in OMPL from ONGC. This had paved the way for merging OMPL with MRPL. Once this is done, the next stage of merging MRPL with HPCL will begin.
OMPL, a subsidiary of MRPL, is a joint venture between ONGC and MRPL, set up for value addition of excess naphtha and aromatic streams available from the MRPL refinery. The complex is the largest single stream unit in Asia, producing 914 KTPA Para-xylene and 283 KTPA Benzene.
MRPL is a subsidiary of ONGC and schedule 'A' Miniratna, Central Public Sector Enterprise (CPSE), under the Ministry of Petroleum & Natural Gas. As on December 31, 2020, ONGC held 71.63 per cent and HPCL held 16.96 per cent stake in MRPL.