Page 54 - Plastcs News August 2017

BuSINESS NEWS

Govt tweaks HPCL's terms of Petronas scouts for LNG

sale to ONGC to avoid 'open opportunities in India

offer' alaysia's national oil company Petronas plans to
Mlook for equity partnerships in the liquified natural
he government has tweaked the terms of sale of its gas(LNG) infrastructure segment in India. To expand its
T51.11 per cent stake in Hindustan PetroleumCorporation presence in the country, the company is also looking to
(HPCL) to oil and the Natural GasCorporation (oNGC) by secure long term LNG supply contracts. "We are looking
including phrases that will help avoid triggering an open at options in the LNG infrastructure space like gas
offer according to reports in EconomicTimes . The Cabinet terminals and pipeline through equity partnerships in
Committee on India," said Datuk Wan Zulkiflee Wan Ariffin, President
Economic Affairs & Group CEO for Petronas. With over 30 million tonnes
(CCEA) had on per annum supply capacity, Petronas is currently the
July 19 granted third largest LNGplayer globally. However with around
“in-principle” 15 LNG cargoes delivered to India, its exposure to
approval for India's LNG business so far is insignificant. At present,
strategicsale the company's LNGexposure to India is through the spot
of t he market. However, the company will focus on procuring
government’s long term LNG contracts in India. India overall
stake in HPCL contributes close to $1.5 billion to the company's total
to o NGC turnover of $50 billion. Petronas' largest exposure
“along with the to India is through crude supply, with India being its
transfer of management control, which will result in largest crude supply market internationally. It now
HPCL becoming a subsidiary company of oNGC”. The looks to expand its presence in other segments like
Department of Investment and Public AssetManagement LNG and lubricants. In the lubricants segment, the
(Dipam) had on July 21 used the same formulation company plans to triple its market share in India in
to invite expression of interest from investment and the next five years. Ariffin added that the company's
merchant bankers to manage thetransaction. But, since current lubricants market share in India is in single
the offer meant transfer ofmanagement control from digits. Commenting on any plan to invest in the
government to oNGC, there was apprehension it would exploration segment in India, Ariffin said, "No plans for
trigger Sebi’s takeover code and compel oNGC to make exploration in India at the moment. Need to look at the
an open offer to acquire an additional 26 per cent stake terms and conditions in India." In the petrochemical
from the minority shareholders. So, Dipam on August 7 segment, the company is bullish on improving sales
amended the terms to state that “HPCL will continue to in India. "India
be a Government company in terms of section 2(45) of the is seeing a lot
Companies Act, 2013, and will continue to be controlled of consumer
by the Governmentof India through oNGC under the demand and
administrative control of the Ministry of Petroleum and has a long way
Natural Gas”. Though the government is cashing out on to go. We have
its holding, the amended terms make it clear that it will been supplying
continue to retain control of HPCL, the official said, adding many types of
since there is no transfer of actual control, there would chemicals to
be no requirement of an open offer.Another change DIPAM India and these
made in the July 21 Request for Proposal (RFQ) by saying are the feedstock
it wants to engage one advisor from reputed professional o f o ther
consulting firms/ investment bankers/ merchant do wns tr eam
bankers/ financial institutions/ banks for managing the pr o ducts in
disinvestment process, and not two as was advertised India," Ariffin said. Ariffin and his entire executive
previously. Besides, one reputed law firm with experience team are in India on a week long trip to meet
and expertise in mergers and acquisitions or takeovers or customers. The company officials also met non-oil
strategic disinvestment would be appointed to act as legal and gas companies like Infosys and Paytm in India to
adviser, according to the notice inviting bids. adopt better digitisation practices for its operations.

Plastics News | August 2017 54