“The ONGC-HPCL proposal could be taken up by the Cabinet,” a senior government official said. Petroleum Minister Dharmendra Pradhan has twice given public statements that the merger of ONGC and HPCL would be completed in the current financial year.

According to a proposal floated by the finance ministry’s Department of Investment and Public Asset Management (DIPAM), the government is looking to sell its entire 51.11 per cent stake in HPCL to ONGC.

This would, however, trigger an open offer to minority shareholders unless the Securities and Exchange Board of India (Sebi) grants an exemption. The need for an open offer can be obviated through a merger or an amalgamation, instead of takeover. The other option is that the government sell less than 25 per cent equity, in which case ONGC will not get management control.

Under the Takeover Code prescribed by Sebi, if an entity acquires more than a 25 per cent stake or takes over the management of a listed company, it has to make an open offer on equal terms. The public holding in the company being taken over should, however, not fall below 25 per cent, a requirement for listing.

There have been reports that the finance ministry is seeking a substantial premium from ONGC for the stake it wants to buy in HPCL. According to Tuesday’s share closing price on the BSE, a 51.11 per cent stake in HPCL is worth Rs 28,700 crore.

The government has planned a number of mergers and acquisitions in the public sector undertaking (PSU) space this fiscal year. In his 2017-18 Budget speech, Finance Minister Arun Jaitley had said the government saw “opportunities to strengthen” PSUs through consolidation, mergers and acquisitions. He gave the example of the oil and gas sector. “We propose to create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies.”

The total disinvestment target for FY2017-18 is Rs 72,500 crore. Of this, Rs 46,500 crore is expected to come in from minority stake sales, buybacks, mergers, public listings and through the CPSE ETF route. About Rs 15,000 crore is budgeted to come in from strategic sale in PSUs and in SUUTI. The remaining Rs 11,000 crore is expected to come from the earlier-announced plans to list five state-owned general insurance companies.