PSU oil sector mergers exempted from CCI regulation
24 November 2017
The government has exempted acquisitions and takeovers involving public sector oil and gas companies from mandatory approvals from the Competition Commission of India (CCI), in a move that would pave the way for mega mergers in the oil and gas sector.
The ministry of corporate affairs on Thursday issued a notification announcing the changes to the existing rules, thereby removing legal and procedural obstacles in merging and consolidating state-owned oil and gas firms.
The changes in rules are key to the government's plans to consolidate its oil sector assets into a stronger, financially sound entity.
As per the MCA notification, all cases of combinations involving central public sector enterprises (CPSEs) operating in the oil and gas sector under the Petroleum Act, 1934 have been exempted from the CCI approval requirement for five years. The exemption will also be applicable to their ''wholly- or partly-owned subsidiaries operating in the oil and gas sectors, from the application of the provisions of sections 5 and 6 of the (Competition) Act, for a period of five years''.
The Cabinet Committee on Economic Affairs (CCEA) has already moved ahead with the first such merger, involving the sale of its 51.11 per cent stake in oil refiner Hindustan Petroleum Corporation Ltd (HPCL) to state-run oil and gas producer ONGC Ltd.
Reports, meanwhile, said the oil ministry is now actively considering a plan to merger smaller oil producer Oil India Ltd with the country's largest refiner Indian Oil Corporation (IOC). Government is also fast-tracking consolidation movers, in part also to monetise its stakes in smaller oil and gas firms.
The notification exempting state-run firms comes the MCA exempting CCI approvals for mergers of nationalised banks.