In a move to build a vertically-integrated mega oil and gas company, the Union Cabinet, headed by Prime Minister Narendra Modi on Wednesday, gave an in-principle nod to the merger of state-owned Oil and Natural Gas Corp (ONGC) and Hindustan Petroleum Corp ltd (HPCl). The merger deal is expected to be valued at nearly Rs 30,000 crore and it is likely to be completed within this financial year.

As the giant oil PSU plan envisaged by Modi is taking shape, the Government is also considering forming a Group of Ministers (GoM) to frame guidelines, price and timeframe for the sale deal.

According to the sources, a committee for the mega merger deal will be formed soon. “Finance Minister, Road and Transport Minister and Oil Minister will be a part of the merger panel. The sale deal could be valued at nearly Rs 30,000 crore and the Government will ensure that there is no open offer,” sources said.

As far as the merger deal is concerned, ONGC will buy Government’s 51.11 per cent stake in HPCl but will not have to make an open offer as the Government’s holding is being transferred to another state-run firm and the ownership isn’t changing.

“HPCl will become a subsidiary of ONGC and will remain a listed company post the acquisition,” the source said, adding that the board of HPCl will continue to remain in place.

Before the ONGC-HPCl merger, ONGC will merge with the Mangalore Refinery and Petrochemicals ltd (MRPl). ONGC currently owns 71.63 per cent of MRPl while HPCl has 16.96 per cent stake in it.

Union Finance Minister Arun Jaitley had said in his budget speech that there was scope of integration in the country’s oil and gas sector. The holding company approach was first proposed in 2005 by a committee, headed by V Krishnamurthy. ONGC had sent a proposal to acquire HPCl, Oil Minister Dharmendra Pradhan said in the Parliament on Wednesday.