The government is set to start consultations for an ambitious plan to merge 13 state oil firms to create a giant corporation whose revenue dwarfs global energy major Chevron which competes with US conglomerate General Electric in the Fortune-500 ranking.
The Cabinet Secretariat has referred the idea of the integrated giant, which would also absorb various institutions related to safety, development and analysis, to the oil ministry, sources familiar with the development.
Following this, the oil ministry has begun the process of evaluating the prospects of creating the conglomerate, which will have a bigger market value than Russian state oil giant Rosneft and India's Reliance Industries Ltd, sources said. It plans to consult all stakeholders including the state firms that may be combined to create the Mega Corporation that will be the country's No. 1 in turnover, net profit, capital expenditure and market capitalization, they said.
The oil ministry declined comment for the story.
A similar proposal was considered more than a decade ago. But the government in July 2005 said that the official committee that studied the matter felt that a merger or formation of the holding company "may not be advisable for the present".
Oil and Natural Gas Corporation (ONGC), the top oil producer and one of the largest companies in the country, leads the pack of 13 state oil companies that are being considered for the merger. Other companies include Indian Oil Corporation, the nation's largest refiner and fuel retailer, Bharat Petroleum Corporation Hindustan Petroleum, GAIL, Mangalore Refinery and Petrochemicals (MRPL), Chennai Petroleum, Numaligarh Refinery and Oil India.
A consolidated entity could rival the likes of Russia's Rosneft ($55 billion in market cap) and UK's BP Plc ($112 billion) in market value and financial power.
The top six listed Indian state oil firms have a market value of $77 billion. In 2015-16, all state oil firms together reported a profit of Rs 45,500 crore on a revenue of Rs 9,32,000 crore. In the current fiscal year, they have planned a capital expenditure of Rs 87,600 crore.
The government is also evaluating if the consolidated entity can include all non-corporate government bodies in the oil sector such as Oil Industry Development Board (OIDB), Petroleum Planning and Analysis Cell (PPAC) and Petroleum Conservation Research Association.
