ONGC has already lined up plans to sell its stake in Indian Oil Corporation (IOC) and GAIL (India) and has also got approvals from shareholders to borrow up to Rs 25,000 crore from the market. “We are looking into all options. As we have to look at favourable market conditions for selling stake in the two companies, we are looking into the option of a bridge loan or any short-term loan for at least a year,” an ONGC official said.

The Union Cabinet had given its clearance to sell 51.11 per cent government holding in HPCL to India’s largest explorer ONGC on July 19 to create a global energy giant. Based on the current market capitalisation of HPCL, the acquisition is likely to cost about Rs 33,000 crore.

The department of investment and public asset management (Dipam) is likely to finalise the timing of the deal soon. However, in his last press conference as Chairman and Managing Director of ONGC, D K Sarraf had said the deal was likely to happen by December. ONGC has already appointed Citi Bank and SBI Caps as consultants for the deal.

“We are looking at various options for funding the deal, including borrowing and also selling of IOC and GAIL stakes. ONGC currently holds 13.77 per cent stake in IOC and 4.87 per cent in GAIL. As ONGC, we would like to acquire the stake at market price without paying any premium,” Saraff said.

ONGC had completed its Rs 7,738-crore acquisition of an 80 per cent stake in Gujarat State Petroleum Corp’s K G basin gas block last month. It was in December 2016 that ONGC had agreed to buy the entire 80 per cent interest of GSPC along with operational rights in Block KG-OSN-2001/3 in the Bay of Bengal for $995.26 million.

After the GSPC payout, the company’s cash in hand comes to the tune of Rs 10,000 crore. “We also have the option of using this Rs 10,000-crore cash balance and can borrow from the markets for capex for the current year,” said another official. For FY18, the company has lined up a capital expenditure of Rs 29,968 crore, while it spent Rs 1,50,091 crore as capex in the past five years.

In its presentation post the annual general meeting, the company said the advantages of the HPCL deal would include increased presence in midstream and downstream sectors, synergic utilisation of MRPL, OPaL and OMPL and exposure across commodity cycles. Ideas were floated regarding the merger of HPCL and MRPL after the ONGC-HPCL deal. The idea is to delist MRPL from the market and merge it with HPCL. “It is a decision that the managements of both the companies have to take. But as a parent company, we would support that,” Saraff said.