A source close to the development said, “At this pace, the deal is unlikely to happen in FY19. Neither the MRPL board has taken up the proposal nor a consultant has been appointed in this regard." With this, it is almost certain the deal is unlikely to happen during the tenure of the current government, he said.

The government holds an 88.58 per cent stake in MRPL. Of this, ONGC holds 71.63 per cent, while HPCL has 16.96 per cent.

Interestingly, MRPL is among the 30 public sector undertakings (PSUs) yet to comply with the minimum public shareholding guidelines of the Securities and Exchange Board of India (Sebi).

Based on Sebi’s norms, companies are supposed to maintain a minimum of 25 per cent public stake. The regulator has already penalised private sector companies for failing to meet this. MRPL was supposed to meet the guidelines in August, but is yet to do so.

According to industry experts, HPCL will look at various options to workout the deal. This includes a buyout of ONGC’s shares, a share-swap deal or a combination of both these. Based on the current market capitalisation of MRPL, the buyout will cost HPCL around Rs 9,000 crore.

However, industry experts are bullish about the possible synergy the merger can bring in for ONGC. The combined entity of HPCL and MRPL will have a refining capacity of 35 million tonnes (mt), and a retail network of around 15,000.

The experts highlight the proposed merger will add value to the earlier HPCL-ONGC deal, and streamline the full-value chain of oil from drilling. ONGC had acquired the entire government stake of 51.11 per cent in HPCL for Rs 36,915 crore last year.

“The synergy from the merger includes freight advantage in the west coast, and imports of crude for both the refineries,” said Anshuman Agrawal, manager (downstream) of US-based consulting firm Stratas Advisors.