Progress in merging India’s oil companies may be slow

Subject

India's efforts to make state-run oil companies more competitive at home and abroad.

Significance

India’s Oil and Natural Gas Corporation (ONGC), which specialises in exploration, is set to acquire a majority stake in refiner Hindustan Petroleum Corporation Limited (HPCL) by the end of the fiscal year ending March 2018. The planned consolidation of these two state-owned enterprises (SOEs) reflects the Indian government’s aim of making public sector oil companies more competitive at home and abroad, improving long-term energy security.

Impacts

• India’s oil ministry will become increasingly involved in scrutinising oil companies’ competitiveness domestically and overseas.
• Any perceived privatisation of the ONGC’s assets could be met with protests by many of its 33,000 employees.
• The ONGC will in the long term need to diversify into a broader energy company rather than focusing only on oil and gas.