India plans to ask ONGC to consider rights issue to fund HPCL: report

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₹15,835 c rore) for financing green projects of HPCL via issuance of preferential shares. Reuters claimed that two sources close with the developments have informed about the bail out plan. The oil ministry is awaiting a response from the finance ministry on the plan for ONGC to launch a rights issue, one of the sources said, claimed Reuters.

Based on rights issues previously announced by two other state refiners, an ONGC issue could amount to about ₹15,500 crore ($1.86 billion), Reuters calculations show. The comments come after India's finance minister announced a plan this year to provide equity of 300 billion rupees ($3.6 billion) to help the big state oil refiners move towards cleaner energy. The government is weighing options for HPCL, including directly providing loans at preferential rates, said the sources, who have direct knowledge of the matter.

They sought anonymity as they were not authorised to speak with media. In 2018, New Delhi sold its entire stake of 51.1% in HPCL to ONGC, making the firm a subsidiary of India's top energy explorer. The government holds a stake of 58.93% in ONGC.

Initially, the government had planned to infuse funds into HPCL by allocation of preferential shares, but that risked pushing ONGC's stake below 50% and ending the government's indirect control of HPCL, one of the sources said. ONGC, HPCL and the oil and finance ministries did not immediately respond to requests for comment. India's other big state refiners, Indian Oil Corp and Bharat Petroleum Corp have announced plans to launch rights issues of 220 billion and 180 billion rupees, respectively.