The stocks of PSU refiners HPCL and BPCL slipped 9 per cent and 12 per cent last week. News that the government may sell its stake in either of the refiners to public sector explorer ONGC pulled down these stocks.

There is no official word of when and how the integrated oil major proposed in the Budget will be set up. Reports say that rather than a merger, the Centre plans to sell its 51.1 per cent stake in HPCL to ONGC. A merger would mean HPCL being subsumed into ONGC. A stake sale, on the other hand, will make HPCL a subsidiary of ONGC, both entities operating separately. The government, richer by about ₹30,000 crore, will retain control over both entities.

Some analysts feel that BPCL with good presence in exploration may be a better fit for ONGC. Uncertainty about the proposed consolidation has caused market nervousness — there are worries that the refinery companies will lose functional autonomy.

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